Change Definition of Exempt Supply under GST : ICAI

By | October 2, 2017
(Last Updated On: October 2, 2017)

Suggestions on GST Implementation Issues 28.09.2017 by ICAI Indirect Tax Committee

Law Related Issues

5. Definition of Exempt Supply – In line with Govt. Policy

As per the definition given in Section 2(47) of CGST Act, “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;

Issue

• Non-Taxable Supplies have been excluded from the scope of Aggregate Turnover
in the CGST Act but still the term “Exempt Supply” covers the same. Thus,
inclusion of non-taxable supply in the exempt supply would ultimately bring it
within the scope of aggregate turnover.
• Interpretation of aforesaid definition appears that supply made to job worker
covered under exempt supply. Since a registered taxable person may send any inputs
and/or capital goods without payment of tax, to a job worker for job-work and
therefrom subsequently send to another job worker.

Suggestions
• It is suggested that non-taxable supplies be kept outside the ambit of ‘exempt supplies’
as well as ‘aggregate turnover’. Inclusion of non-taxable supplies in aggregate
turnover results in an effectively lower limit for composition levy as well as for
threshold exemption. Further, when a supply is non-taxable, it should not affect the
taxability indirectly by affecting the threshold exemption and composition scheme.
• An amendment may be required in said definition that ‘’Exempt supply means any
supply of goods/services which are non-taxable under this act other than supply for
job work in accordance with Section 143 of the Act and includes such supply of goods
or services or both, which attract nil rate of tax or which may be exempt from tax under
section 11.

 

Read Suggestions on GST Implementation Issues 28.09.2017 by ICAI Indirect Tax Committee

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About CA Satbir Singh

Chartered Accountant having 12+ years of Experience in Taxation , Finance and GST related matters and can be reached at Email : Taxheal@gmail.com

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