Exempt Supply – Sec 2(47)
- “exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply.
- Exempt supply has a very broad meaning and also includes non taxable supplies. Such supplies are included in the aggregate turnover for determining whether registration is required or not under Section 22(1) of the CGST Act, 2017.
- Exempt supplies comprise the following 3 types of supplies:
- Supplies taxable at a ‘NIL’ rate of tax (Sl. No 24 of Notif No 11/2017-CT(R) dtd 28-06-2017);
- Supplies that are wholly or partially exempted from CGST or IGST, by way of a notification; (viz Notification No 2/2017-CT(R) and 12/2017-CT(R) dtd 28-06-2017)
- Non-taxable supplies as defined under Section 2(78) – supplies that are not taxable under the Act (viz. supplies by a person having aggregate turnover below Rs 20 lacs))
- The activities covered under Schedule III to the CGST Act, 2017, are treated neither a supply of goods not a supply of services would NOT be included in exempt supply. Example: Employees services to employer, land or completed building sale etc.
- Zero-rated supplies i.e. exports and supplies to SEZ, would not be treated as supplies taxable at ‘NIL’ rate of tax;
- Input tax credit attributable to exempt supplies will not be available for utilisation / set-off.