Navigating the Goods and Services Tax (GST) in India can be overwhelming for many individuals and small businesses. While most goods and services attract GST, there are a surprising number of exemptions that can save you money—if you know about them. In this guide, we’ll uncover GST exemptions you probably didn’t know about, who can benefit from them, and how to ensure you remain compliant while saving on tax.
What Are GST Exemptions?
GST exemptions refer to goods or services that are not liable for tax under the GST Act. This means you don’t have to collect or pay GST on them. These exemptions are designed to protect essential goods and services and support small businesses, education, healthcare, and more.
Broadly, GST exemptions fall into the following categories:
- Goods exempt under Notification No. 2/2017 – Central Tax (Rate)
- Services exempt under Notification No. 12/2017 – Central Tax (Rate)
- Threshold exemptions for small businesses
Common GST Exemptions You Should Know
Most people are aware of basic GST exemptions like:
- Unprocessed agricultural produce
- Educational services
- Healthcare services
- Public transport
- Milk, fruits, and vegetables
But there’s more you might be missing.
GST Exemptions You Probably Didn’t Know About
Here are lesser-known GST exemptions that could be valuable for you:
1. Renting of Residential Property
If you rent out residential property for personal use, it’s exempt from GST. GST only applies if the property is rented to a business entity.
2. Services Provided by Freelancers Earning Below ₹20 Lakhs
If you’re a freelancer or sole proprietor with annual turnover under ₹20 lakhs (₹10 lakhs in special category states), you’re not liable to register for GST or charge it.
3. Services by Charitable Trusts
Charitable or religious trusts that provide services like:
- Conducting religious ceremonies
- Running public toilets or shelters
are exempt from GST.
4. Handloom Sector
Sale of handloom products by artisans or co-operatives is GST exempt. Supporting Indian crafts can also be tax-friendly.
5. Services by Government or Local Authorities
Non-commercial services like issuing a passport or a birth certificate by government agencies are exempt.
6. Educational Training & Skill Development
Vocational training by institutions approved by the National Council for Vocational Training (NCVT) is GST-free.
7. Hotel Accommodation Under ₹1,000
Any hotel, guest house, or homestay with room tariffs below ₹1,000 per day is not taxed under GST.
8. Public Libraries & Reading Rooms
Services provided by public libraries and lending of books are tax-free.
GST Exemptions for Small Businesses
If you’re running a small business, here are some relief measures:
➤ Threshold Limit
- For goods: ₹40 lakhs
- For services: ₹20 lakhs
You are exempt from registration if your turnover is below this limit (except for some categories like e-commerce sellers).
➤ Composition Scheme
Businesses with turnover up to ₹1.5 crore (₹75 lakh for North-Eastern states) can opt for the Composition Scheme. Under this, you pay a lower tax rate and avoid complicated GST filings. However, you cannot claim Input Tax Credit (ITC) or issue GST invoices.
How to Check If You’re Eligible for a GST Exemption
Here’s a quick checklist to know if you’re eligible:
Is your annual turnover below the exemption threshold?
Are you selling unprocessed or essential goods?
Is your service covered under the exemption notification (e.g. education, health, religious services)?
Are you a registered charitable trust or NGO?
Is your residential property rented for non-business use?
You can refer to the official GST exemption list here or consult a tax professional to stay updated.
Real-Life Example: A Freelancer Saving ₹72,000 a Year
Megha, a freelance content writer in Hyderabad, earns around ₹10 lakhs annually. Since her income is below the ₹20 lakh threshold, she:
- Doesn’t need GST registration
- Doesn’t charge GST on her invoices
- Saves nearly ₹72,000 per year in tax and compliance costs
Many freelancers are unaware of this and unnecessarily register and pay GST.
Final Thoughts on GST Exemptions
Understanding GST exemptions can help you:
- Save tax
- Avoid unnecessary compliance
- Streamline your business processes
Whether you’re a freelancer, educator, or running a small shop, staying informed about GST exemptions you probably didn’t know about gives you an edge.
If you’re unsure whether your goods or services are exempt, consult a qualified tax consultant or visit the official GST portal.
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