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SECTION 11-EXEMPTION UNDER GST – GST EXEMPTION



 

EXEMPTION UNDER GST – GST EXEMPTION – SECTION 11 of CGST ACT

The scope of the article mainly concerns the power of governments under section 11 of the CGST Act, 2017, to grant exemptions from the Goods and Services Tax (GST). The nature of the clause, however, is pretty straightforward and clear in that it addresses the reasons for the government's exemption.

Let's first understand the definition of exemption and how Section 11 takes its place in the GST exemption before moving into Section 11 provisions of the CGST ACT.

 GST EXEMPTION – EXEMPT SUPPLY

Exempt supply, under GST, means the distribution of products and services that are not tax-consuming. Since we all know that GST is focused on supply, GST cannot attract GST despite the trigger. The tax credit charged for input in connection with these materials is obviously not available for use and the GST liability will not be excluded.

To put into simple words, the following are three types of supply which are considered as exempt supply:-

 Supplies which are chargeable to nil rate tax

Supplies that are partially and wholly exempt from the charge of GST – Section 11 of CGST and Section 6 of IGST.

Supplies that come under Section 2(78) of the CGST Act, which deals with “non-taxable supply”. Ex. alcoholic liquor for human consumption.

 POWER TO GRANT EXEMPTION FROM TAX

The provision of Section 11 of the CGST ACT basically deals with the power of the Government to grant exemption from tax, i.e., GST for supply for goods and services. But to understand the rationale of this exemption as provided shall necessitate us to look into the underlying conditions that the government considers in order to grant an exemption under this section.

 Governments are initially allowed to grant exemptions, provided that the following requirements are met –

Should be in the public interest

Made by way of issue of notification

Must be recommended by the GST Council

Absolute exemption or conditional exemption

Exemption by way of a special order (not notification) may be granted in exceptional circumstances.

 SECTION 11 of CGST ACT 2017

The language of the section is reproduced below and a granulated description of each subject has been dealt with in order to better understand the provisions. This helps to understand that each paragraph has a distinctive exception.

 Section 11 Subsection (1)

Section 11 Subsection (2)

Section 11 Subsection (3)

Learn More About SECTION 11 of CGST ACT 2017.

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