Section 11- Power to grant exemption from tax – Today i will discuss provisions of Section 11 in very simplified manner-

Section 11 (1)Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the Council, by notification, exempt generally, either absolutely or subject to such conditions as may be specified therein, goods or services or both of any specified description from the whole or any part of the tax leviable thereon with effect from such date as may be specified in such notification.

Analysis- The Central or the State Governments are empowered to grant exemptions from tax, subject to the following conditions:

(i) Exemption should be in public interest;

(ii) By way of issue of notification;

(iii) On recommendation from the Council;

(iv) Absolute / conditional exemption – Now what is absolute / conditional exemption….

Absolute exemption– Complete exemption such as services by way of renting of residential dwelling for use as residence.

Conditional Exemption – The Central Government has exempted the tax payable under the CGST/ UTGST/ IGST Acts by any taxable person on supply of “Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation less than ` 1000/- per day”.

Section 11(2)–  Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the Council, by special order in each case, under circumstances of an exceptional nature to be stated in such order, exempt from payment of tax any goods or services or both on which tax is leviable.

Analysis- Exemption by way of special order (and not notification) may be granted by citing the circumstances which are of exceptional nature.

The GST Law specifies that a registered person supplying the goods and / or services is not entitled to collect a tax higher than the effective rate, where the supply enjoys an absolute exemption.

Effective date of the notification or special order:

The effective date of the notification or the special order would be date which is so mentioned in the notification or special order. However, if no date is mentioned therein, it would be:

  • Date of its issue for publication in the official gazette;
  • Date on which it is made available on the official website of the Government Department.

Section 11(3)-  The Government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or

order, as the case may be, by notification at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be.

Explanation. ––For the purposes of this section, where an exemption in respect of any goods or services or both from the whole or part of the tax leviable thereon has been granted absolutely, the registered person supplying such goods or services or both shall not collect the tax, in excess of the effective rate, on such supply of goods or services or both.

Analysis- The law also provides for the Government to embed a clarification to such notification or special order, by way of an “Explanation”, at any time within a period of 1 year from the date of the said notification or special order. Such explanation inserted within the timelines would have a retrospective effect, viz., from the effective date of the relevant notification or special order.

Also note that an exemption issued under the CGST Act will ‘automatically’ exempt the same supply from the levy of tax under the SGST/UTGST Act. This is provided under the SGST/UTGST Act. But the converse is not necessarily applicable, that is, exemption under an SGST/UTGST Act will not exempt levy of tax under the CGST Act.

Exemption under CGST ACT – Deemed to be exempt under SGST ACT

Exemption under CGST ACT- Deemed to be exempt under UTGST Act

X Exemption under CGST Act – No auto-application of exemption under IGST Act

X Exemption under IGST Act – No auto-application of exemption under CGST Act

Glimpse of important notifications issued for exemption from payment of tax-

Notification No. Particulars
02/2017 – Central Tax (Rate) dated 28.06.2017 Very important Exempted supplies of around 149 items of goods in terms of Section 11(1) of the CGST Act, 2017.

Amended vide Notification No. 28/2017, 35/2017,42/2017, 7/2018 – Central Tax (Rate) 

No. 03/2017-Central Tax (Rate) dated 28.06.2017  Goods specified in the List annexed required in connection with various kinds of petroleum operations undertaken are given concessional rate i.e. at the rate of 2.5% under CGST i.e. 5% IGST. 
No. 07/2017-Central Tax (Rate) dated 28.06.2017  Exemption to supplies by CSD to Unit Run Canteens and supplies by CSD / Unit Run Canteens to authorised customers 
No. 09/2017-Central Tax (Rate) dated 28.06.2017 Exemption granted to supplies to a TDS deductor by a unregistered supplier
 No. 10/2017 – Central Tax (Rate) dated 28.06.2017 Exemption to Supplies of second hand goods received by registered person dealing in buying & selling of second hand goods from unregistered person provided the dealer pays central tax on supply of such second-hand goods as per CGST Rules
 No. 12/2017-Central Tax (Rate) dated 28.06.2017 Very important Exemption to supply specified services under the CGST Act. Almost, all the exemptions were available earlier under the erstwhile regime also under service tax

Amended vide Notification No. 21/2017, 25/2017, 32/2017 and 47/2017, 2/2018 – Central Tax (Rate)

No.18/2017-Integrated Tax (Rate) dated 05.07.2017 Exemption from IGST to SEZs on import of Services by a unit/developer in an SEZ

Relevance of Section 11 in GSTR-9 and 9C –

√ Table 5D of GSTR-9 in respect of “Exempted Outward Supplies

√ Table 7B of GSTR-9C requires the value of Exempted, NIL Rated, Non-GST supplies, No Supply turnover.

I have covered all important aspects related to this section 11… Hope all your doubts are cleared..Have a nice day..

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March 2021