Where GST is Not Applicable: 

As a business owner or consumer, it's essential to understand where GST (Goods and Services Tax) is applicable and where it's not. In India, GST is a value-added tax that's applied to most goods and services, but there are exceptions. In this guide, we'll explore where GST is not applicable and what it means for you.

Where is GST Applicable?

GST is applicable to most goods and services in India, with a few exceptions. The following are some of the goods and services on which GST is applicable:

• Manufacturing and trading of goods
• Provision of services such as banking, finance, insurance, telecom, and IT services
• Sale of real estate properties
• Supply of electricity, gas, and water

Where is GST Not Applicable?

While GST is applicable to most goods and services, there are a few exceptions. The following are some of the cases where GST is not applicable:

Alcohol for Human Consumption

On alcoholic drinks intended for human consumption, GST is not applied. However, it's important to note that state excise duty and other taxes may still apply.

Petroleum Products

GST is not applicable on petroleum products such as petrol, diesel, crude oil, natural gas, and aviation turbine fuel (ATF). These products continue to be taxed under the previous tax regime.

Electricity

GST is not applicable on the supply of electricity. Electricity continues to be taxed under the previous tax regime.

Real Estate Properties

GST is not applicable on the sale of land and building unless the property is under construction. However, if the property is under construction, GST is applicable at a rate of 5% on the value of the property.

Healthcare and Education

GST is not applicable on healthcare and education services provided by government or government-aided institutions. However, if these services are provided by private institutions, GST is applicable.

Export of Goods and Services

GST is not applicable on the export of goods and services. However, businesses engaged in exporting goods and services can claim a refund of GST paid on inputs used in the production of those goods and services.

Services Provided to SEZs

GST is not applicable on the supply of goods and services to Special Economic Zones (SEZs). However, businesses supplying goods and services to SEZs are required to register under GST.

Conclusion

In conclusion, GST is a value-added tax that's applicable to most goods and services in India. However, there are exceptions where GST is not applicable, such as petroleum products, alcohol for human consumption, and healthcare and education services provided by government institutions. It's important to understand where GST is applicable and where it's not, especially if you're a business owner or consumer. By being aware of these exceptions, you can avoid unnecessary penalties and confusion.

FAQs

Can businesses claim a refund of GST paid on inputs used in the production of exempt goods or services?

Yes, companies are eligible to get a refund of the GST they paid on supplies used to produce exempt products or services. The term "input tax credit" (ITC) refers to this.

Is GST applicable to the sale of used goods?

No, GST is not applicable on the sale of used goods. However, if the goods are sold by a registered dealer, GST may be applicable.

Are there any exemptions for small businesses?

Absolutely, organisations with a maximum yearly revenue of Rs. 40 lakhs are excluded from GST registration. The cap is Rs. 20 lakhs for firms in special category states.

Is GST applicable on the sale of gold?

Yes, GST is applicable on the sale of gold. However, if the gold is sold in the form of coins or bars, it's taxed at a lower rate of 3%.

Is GST applicable on services provided by freelancers?

Yes, GST is applicable on services provided by freelancers. If the annual turnover of the freelancer is more than Rs. 20 lakhs, they are required to register under GST.