Goods Exempted Under GST

The Goods and Services Tax (GST) has replaced multiple indirect taxes such as VAT, service tax, and excise duty, bringing them under a unified structure. Instead of separate levies, a single GST is charged on the supply of goods and services, with different rates applicable depending on the category. However, in certain cases, no GST is imposed. This non-application of GST is known as a GST exemption. Such exemptions apply to specific businesses, goods, and services that the government considers essential or priority. This guide provides an overview of the GST exemption list in 2025 and explains the key aspects of GST exemption in detail.

Since the introduction of the Goods and Services Tax (GST) on July 1, 2017, businesses and individuals have been required to comply with GST registration and tax regulations. However, certain goods and services remain outside the GST framework, falling under the exemption list. This means that suppliers of these goods or services are not required to charge GST from buyers, nor remit any such tax to the government.

GST exemptions are periodically revised, and in 2025, the 56th GST Council expanded this list to include more essentials. Exemptions are granted by both the Central and State Governments to reduce the tax burden on critical goods and services, promote affordability, and support priority sectors like healthcare, education, and basic household consumption.

GST exemptions are classified into several categories depending on the nature of goods, services, or businesses. Below are the main types of GST Exemptions:

• Supply-Based Exemption

Certain goods and services are exempt purely because of their nature, regardless of who supplies them. These are usually essentials or socially important services such as healthcare services, education, and unbranded food items.

• Supplier-Based Exemption

Some exemptions are linked to the identity or type of the supplier rather than the goods or services themselves. For instance, government bodies or charitable organisations enjoy exemption from specified activities.

• Absolute Exemption

These exemptions apply universally without any restrictions or conditions. Once a good or service is listed under an absolute exemption, no GST is ever charged on it. For example, services provided by the Reserve Bank of India (RBI).

• Conditional or Partial Exemption

In such cases, GST exemption is available only if specific conditions are met, or only part of the value is exempted. Failure to meet these conditions makes the supply taxable. For example, hotel accommodation under ₹1,000 per night or transport services with fare limits.

An exempt supply under GST refers to the supply of goods or services, or both, that are not subject to Goods and Services Tax. In other words, no GST is charged on such transactions, and the supplier is not required to collect tax from the recipient. Exempt supplies include three main categories:

• Nil-rated supplies

Goods or services taxed at 0% GST (e.g., fresh fruits, vegetables, and salt) as per Section 2(47) of the CGST Act.

• Wholly exempt supplies

Goods or services specifically exempted by government notification (e.g., healthcare and educational services) as per Section 11 of the CGST Act, 2017 and Section 6 of the IGST Act, 2017.

• Non-taxable supplies

Goods or services that fall completely outside the scope of GST (e.g., alcohol for human consumption, electricity, petrol, diesel) as per Section 2(78) of the CGST Act, 2017.

While exempt supplies ease the tax burden on essential sectors, suppliers of such goods or services generally cannot claim input tax credit (ITC) on inputs used in making these supplies.

These are the goods exempted under GST in India in 2025 (Updated as per the 56th GST Council Meeting)

Here are all the categories of services exempted from GST in India in 2025:

The GST framework in India has built-in relief measures to ease compliance for start-ups and small businesses. These exemptions help reduce the tax burden, simplify operations, and encourage entrepreneurship.

• Aggregate Turnover Rule

GST exemptions and registration limits are based on aggregate turnover, which includes taxable supplies, inter-state sales, exempt supplies, and exports, but excludes GST paid, inward supplies, reverse charge, and non-taxable goods/services.

• Exempt Goods/Services

Start-ups dealing only in GST-exempt goods or services (like fresh produce, healthcare, education) don’t need GST registration.

• Exports & SEZ Units

Supplies to SEZs and exports are zero-rated, allowing refunds of input tax credit (ITC).

• Freelancers & Small Service Providers

Individuals with annual income under ₹20 lakhs are exempt from GST registration.

Under the Goods and Services Tax (GST) system, not all businesses and individuals are required to obtain GST registration. The law provides certain exemptions, which are mainly based on turnover thresholds, nature of supplies, and type of taxpayers.

1. Threshold-based Exemption

• Businesses whose aggregate turnover in a financial year is below the prescribed threshold limit are exempt from GST registration.

• Current limits (as of 2025):

  • ₹40 lakhs for suppliers of goods (normal category states).
  • ₹20 lakhs for suppliers of services.
  • ₹20 lakhs for goods and ₹10 lakhs for services in special category states.

2. Exemption for Agriculturists

• Agriculturists supplying produce from cultivation of land are not required to register under GST.

• This ensures farmers selling unprocessed agricultural produce remain outside the GST net.

3. Exemption for Certain Categories of Persons

• Persons making only exempt supplies (goods or services not subject to GST) do not need registration.

• Example: Traders selling fresh fruits, vegetables, or educational institutions providing exempt services.

4. Reverse Charge Mechanism (RCM) Recipients

• Individuals or businesses receiving supplies liable to tax under reverse charge but not otherwise liable for GST are not required to register, provided their turnover remains below the threshold.

5. Casual & Non-Resident Persons (Special Provisions)

• Casual taxable persons and non-resident taxable persons are generally required to register irrespective of turnover. However, specific exemptions are available if they are dealing exclusively in exempt supplies.

Legal Reference:

• Section 23 of the CGST Act, 2017: Persons not liable for registration.

• Section 24 of the CGST Act, 2017: Cases where compulsory registration is required, notwithstanding the threshold.

Here are the reasons why certain exemptions are made under GST:

• Relief on essentials like food staples to protect household budgets.

• Healthcare and education are exempt to keep services affordable.

• Small businesses supported through turnover-based exemptions.

• Exports zero-rated to maintain global competitiveness.

• Agriculture-related goods/services exempt to aid farmers.

• Government functions are exempt to avoid double taxation.

• Interest on loans and similar financial services treated specially.

• Charitable and religious activities exempt for public welfare.

• Exemptions granted where compliance costs outweigh revenue.

• Concessions ease interstate movement and logistics.

• Transitional relief smooths shift from earlier tax regimes.

• Public health and environment supported via exemptions.

• Strategic sectors given relief to boost growth and investment.

• International trade rules are respected to prevent double taxation.

The GST Exemptions are granted by:

• By Notification

The Central Government, on the recommendations of the GST Council, issues official notifications under the CGST Act and IGST Act to exempt certain goods, services, or categories of persons from tax.

• By Inclusion in GST Exemption List

Goods and services specifically listed in Schedules of the GST Act or in exemption notifications are automatically treated as exempt.

• By Threshold Exemption

Businesses with turnover below the prescribed threshold (₹40 lakhs for goods, ₹20 lakhs for services, lower for special category states) are exempt from mandatory GST registration.

• By Special Orders/Exemptions

In exceptional cases, the government may issue special orders for specific classes of taxpayers, sectors, or regions, often to address urgent socio-economic needs.

A non-taxable supply refers to goods or services on which GST is not leviable at all, because they fall completely outside the scope of the GST law. Unlike exempt supplies (which are taxable but given exemption through a notification), non-taxable supplies are excluded from the very definition of taxable supplies. These can include:

• Alcoholic liquor for human consumption (kept outside GST; subject to state excise/VAT).

• Petroleum products such as crude oil, petrol, diesel, aviation turbine fuel (ATF), and natural gas (till notified under GST in the future).

• Electricity (covered under Electricity Act, not GST).

In the context of GST, a Negative List refers to supplies of services that are kept completely outside the scope of GST law. Unlike exempt supplies (where GST is leviable but exempted through notifications), items on the negative list are not subject to GST at all. These supplies are excluded either due to constitutional provisions, policy decisions, or practical considerations.

Examples of Negative List under GST

1. Employment services: Salary paid by employer to employee in the course of employment.

2. Judicial duties: Services by courts or tribunals.

3. Funeral, burial, crematorium, or mortuary services.

4. Sale of land and completed buildings: Subject to stamp duty, not GST.

5. Actionable claims other than lottery, betting, and gambling.

Under the GST framework, supplies are classified into Exempt, Nil Rated, Zero Rated, and Non-GST categories, each carrying different tax implications and treatment of Input Tax Credit (ITC).

• “GST 2.0” Overhaul (September 2025) The GST structure was simplified into two core slabs—5% and 18%, with a new 40% rate for luxury and sin goods, effective from 22 September 2025. The overhaul also fully exempted individual health and life insurance premiums, including ULIPs, term plans, senior citizen health covers, and family floater policies, reducing the cost burden for millions of households. Additionally, motor vehicles received rationalised GST rates: small cars and entry-level bikes saw a reduction to 18%, while luxury cars like the Fortuner and high-end motorcycles were shifted under a uniform 40% slab, bringing clarity and predictability to vehicle taxation. Essentials and everyday items were also either moved to zero or lower GST brackets, making the overall tax system simpler and more citizen-friendly.

• Next-Gen GST Reforms by Diwali (August 2025) PM Modi announced comprehensive reforms to reduce GST on everyday items, enhancing affordability ahead of the festive season.

• Notifications Effective from 16 January 2025

  • Fortified Rice Kernel (FRK) GST reduced from 18% to 5%
  • Gene therapy added to GST exemption list
  • Used EVs now taxed at 18% (up from 12%), based on margin
  • Exemptions for NSDC-approved training services, motor insurance fund services restored
  • Revised rules for hotel premises and reverse charge provisions

• Regularization & R&D Service Clarifications (Oct 2024 – Jan 2025)

  • Exempted R&D services by government bodies granted relief from past GST retroactively (10 Oct 2024 onwards)
  • Skilling services by NSDC partners restored to exempt status from 16 Jan 2025, regularized for earlier period *Source - https://gstcouncil.gov.in/press-release