Negative List of Supply, Non Taxable Supply, Exempt Supply in GST

 Negative List of Supply, Non Taxable Supply, Exempt Supply under GST: As per section 7(2) (a), activities or transactions specified in Schedule III, shall be treated neither as a supply of goods nor as supply of services. Activities specified in Schedule III are as under:

Negative List of Supply

Negative List of Supply

Comments:

1. Services by employees to employer are covered by the negative list of supply but services by employer to employee are not covered by the Negative list. When the employer provides boarding, lodging transportation service, canteen facility, medical facility to the employee, he can be said to have provided service to the employee.

Since the employer and employee are covered by the definition of related person, hence if employer charges nothing for provision of such services, the amount is taxable in the hands of the employer. However, as per Schedule I, gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.

2. Sale of land and building are not taxable being covered by the negative list but construction of complex service provided before issue of a completion certificate is taxable.

3. Amongst actionable claims, only lottery, betting and gambling are taxable.

Non Taxable Supply

There are items on which GST is not be leviable when Supply will be treated as non-taxable supply. As per Section 2(78), “non-taxable supply” means a supply of goods or services or both which is not leviable to tax under this Act or under the Integrated Goods and Services Tax Act;

On items mentioned in section 9(1) and section 9(2) of the CGST Act, 2017 on which currently GST is not leviable are alcoholic liquor for human consumption, petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel.

Exempt Supply

There are certain supplies on which GST is not payable. As per section 2(47)

“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;”

Hence, in GST tariff there are supplies of goods which attract “nil” rate of duty and it will be treated as exempt supply. They are exempt from GST by the government on issuance of notification under section 11 of the CGST Act, 2017 or under section 6 of the IGST Act, 2017. Those supplies will be treated as exempt supplies. Even non-taxable supplies are treated as exempt supplies.

Exempt supply comprises of the following:

  • “Nil” rated supply- the same is exempt vide Notification no. 2/2017 dated 28.06.2017
  • Supply exempt under section 11 of CGST Act, 2017 or section 6 of IGST Act, 2017 – e.g.Notification no. 12/2017 dated 28.06.2017
  • Non-taxable Supply – Supplies specified in sections 9(1) and (2) of the CGST Act, 2017

With Supply being treated as exempt supply, input tax credit of the same is not available to the supplier. There is also a term called “zero rated supply”. Zero rated supplies are exports or SEZ supplies. Though there is no tax on the same, it is not exempt supply.