Exemption list to be pruned for GST


Excise relief for around 200 items may go, zero rate being debated

Tea, coffee, biscuits and some medicines, currently exempted from excise duty, may come under the proposed goods and services tax (GST) as the finance ministry and empowered committee of state finance ministers draw up a common list of exempted items.

The Centre’s excise duty exemption list of around 300 items will be reduced to the states’ value-added tax (VAT) list of close to 90.

“We are finalising the exemption list. Excise exemptions will be pruned to around 90 items,” said a government official. “The idea is to keep exemptions to a minimum.”

States exempt unprocessed goods and those consumed by the poor like fruit, vegetables, salt, grain and coarse fabric. The Centre provides excise exemption to processed food and pharmaceuticals and a concessional rate to fruit-based items. Common items between Centre and states include bread, eggs, milk, vegetables, cereals, books and salt, which will continue to be exempted.

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Items of importance in certain states could also be exempted. “Coconut oil in Kerala and sattu in Bihar are of local importance and state-level exemption could be provided,” the official said.

The negative list of services, exempted from the levy, will be reduced to include only essential services like health and education. “We will have a very small number of essential services out of the GST net,” the official added. The negative list of services has 18 heads, which include health care, education, goods transport agency and non-air conditioned restaurants, among others.

Chief Economic Advisor Arvind Subramanian, in his recommendation on a revenue-neutral rate for the GST, has argued eliminating the exemptions on health and education will make tax policy more consistent with social objectives. He has also recommended bringing electricity and petroleum within the scope of the GST.

“The government has been pruning the excise exemption list for quite some time. From 542 items in 2011, it has come down 300 items,” said Rajeev Dimri, leader of indirect tax at BMR & Associates LLP.

“It will be difficult to have local items in certain states on the exemption list. The technology system has been designed in a way that there cannot be different lists for different states,” pointed out Satya Poddar, senior tax advisor, EY.

“Some flexibility is sought to be introduced for goods of local importance, like in West Bengal,” said Saloni Roy, senior director of Deloitte in India. “There are concerns over how area-based exemptions will be treated in a GST environment,” Roy added.

The government is also yet to decide on a zero rate. “We are yet to take a view on whether there needs to be a zero rate,” the official said. Poddar of EY argued the zero rate would continue to be limited to exports if it was part of the GST.


14 Replies to “Exemption list to be pruned for GST”

  1. jignesh shah says:

    if gst is implemented on 1st april 2016 than how would the software developers , dealers and advocates will catch up with the system

    1. Admin says:

      That is exactly why this site is spreading every available resource for GST in India. The Indian government has covered a lot of ground in the last year, in terms of building up its infrastructure. Its up-to us how we remain proactive to get aquatint to its taxation framework. Its not an uphill task once we get the gist how GST Framework set in. Good luck to all of us!

  2. yogesh kamath says:


  3. Atul Shah says:

    On medicines and packaged goods there is MRP includind taxes. MRP structure takes in to account VAT (say 6%) Now when GST is say 12%, the additional tax will reduce margin on closing stocks by 6%. In some products this may cause loss. What provisions are under consideration for transitional issues like this.

  4. BHASKAR R says:


  5. Krishna says:

    Exice tax exemptioned

  6. P K Gupta says:

    All low cost textiles under Rs100 per metre, cotton or polyester, must be made GST free, otherwise there will be a very severe impact on many areas including exports, leather goods exports. This will lead a loss of orders to China, Pakistan and Southeast Asia and result in great loss of employment.

  7. UK dutta says:

    Sir rt now if we buy anything from CSD canteen we get a discount. Supposedly if I buy a car different states have a different rate of tax rebate. Wat ll be t discount after gst implementation. If I m planning to buy a small car through CSD shall I wait for gst to be implemented.

  8. kalpana savant says:

    what is the rate of GST on commercial training & professional coaching classes. now we r paying 15 % st on our services.

    1. Admin says:

      Still the rates has not been announced but broadly defined only.

  9. Dushyant says:

    Currently Textile Saree Processing and Traders are exempt from Excise and VAT . But AED is applicable on Yarn so do we require to take registration in GST ?

  10. Indra Narayan mahato says:

    दूध से GST full free

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