New

Udeetta Sarma

September 29, 2024

Blog |

Explore GST

Basics of GST

‍List of GST Exempted Goods

Good and Services Tax (GST), which was introduced in 2017, has been one of the biggest game changers when it comes to simplifying the tax structure in India as it replaced several indirect taxes into one. GST is levied on the majority of goods and services, there are some essential commodities or items that are free from GST. This would mostly be just to make sure that it remains affordable and all but, suitable industries like health care, education, agriculture etc. are encouraged through this exemption. In FY 2023-24, GST collections crossed ₹20 trillion, marking an 11.7% increase compared to the previous fiscal year, with average monthly collections at ₹1.65 lakh crore.

This blog will take you through the fresh list of GST exempted goods, to provide a one-shot guide for everything that is out of the tax net in 2024.

Why Are Some Exempted Goods under GST

Reasons for GST exemptions are myriad.

1. Affordability: Products or services that are essential for everybody like food items, and health products should be tax-free so that lower-income sections benefit from them.

2. Promoting Development: Products such as agri-inputs in agriculture being out of the tax net will help farmers and encourage development in rural areas.

3. Public Welfare: Goods and Services related to health, education and public services are often exempted to make them accessible and affordable to everybody.

Major Categories Exempted Goods under GST

1. Agricultural and Dairy Products

Agriculture is the backbone of India’s economy, employing over half of the population. To support this sector, several agricultural products are exempt from GST. These include:

- Fresh fruits and vegetables: Unprocessed and untreated by preservatives.

- Cereal grains: When sold in their raw form (e.g., wheat, rice, barley).

- Pulses and legumes: Including chana, moong, masoor, etc.

- Milk: Fresh milk, including skimmed milk powder.

- Eggs: Unprocessed eggs are also exempt.

- Honey: Natural, unprocessed honey is tax-free.

Processed food products like pickles, jams, and pre-packaged fruits or vegetables are not GST-exempted products.

HSN Code & GST on Agriculture Equipment is better explained here.

2. Education and Books

To promote literacy and education, most educational services and materials are exempt from GST. The key exemptions in this category include:

- Educational services: Provided by institutions from pre-school up to higher secondary schools.

- Textbooks: Books for school education are GST-free, but notebooks, registers, and other stationery attract GST.

- Print newspapers: News publications in physical form remain tax-exempt.

Digital educational services like e-books or online courses, however, are not exempt and may fall under different tax slabs.

3. Healthcare

Healthcare is another area where the Indian government has provided significant GST exemptions to make healthcare services affordable. The exemptions include:

- Health services: Services provided by clinical establishments such as hospitals and nursing homes.

- Blood and organ donations: No GST is applicable on blood donations or organ transplants.

- Pharmaceutical products: While most basic drugs are taxed, life-saving drugs (like those for HIV/AIDS, malaria, etc.) are exempt.

- Medical devices: Certain essential medical items like human blood, vaccines, and contraceptives are exempt, but others (like surgical instruments) might attract GST.

4. Public Utilities

Goods and services that are part of government welfare schemes or are essential public utilities also fall under GST-exempted goods:

- Water: Non-bottled drinking water is exempt from GST. However, packaged drinking water is taxed.

- Electricity: Electricity is exempt, though GST applies to certain renewable energy equipment and products.

- Municipal services: Basic municipal services provided by the government, including sewage and waste management, are GST-free.

5. Handicrafts and Handloom Products

India’s rich tradition of handicrafts and handloom products has received a favourable GST structure. Certain traditional hand-made goods, particularly those promoting rural artisanship, are tax-free:

- Khadi products: Unprocessed khadi (handwoven cloth) is exempt.

- Handloom fabrics: Natural fibre-based fabrics (like silk, cotton, wool) are GST-free.

- Handmade sculptures: Handcrafted items, particularly if sold by the artist directly, can be exempt depending on their nature.

6. Other Essential Goods

In addition to the main categories, the following essential goods are also exempt:

- Fresh meat, fish, chicken: Unprocessed and uncooked varieties.

- Jaggery and salt: Basic food additives like jaggery (gur) and non-branded salt.

- Human hair: Untreated or unprocessed hair.

Updated List of Key GST-Exempted Goods (2024)

Here is an updated quick-reference list of key goods that are exempt from GST in 2024:

GST-Exempted Goods/Services	Category	Reason for Exemption	Impact on Society
Fresh fruits and vegetables	Food	Essential for nutrition	Supports health and well-being
Milk and dairy products (unprocessed)	Food	Nutritional Necessity	Aids child development
Cereal grains and pulses	Food	Staple food items	Ensures food security
Unbranded natural honey	Food	Natural product	Promotes local agriculture
Eggs (in their natural form)	Food	Nutritional Necessity	Affordable protein source
Educational services and textbooks	Services	Promotes education access	Supports literacy and skill development
Healthcare services, blood, and organ donations	Services	Essential for public health	Saves lives and promotes health equity
Life-saving drugs	Medical	Critical for treatment	Direct impact on survival rates
Non-packaged drinking water	Utilities	Basic Necessity	Ensures access to clean water
Electricity	Utilities	Essential for daily life	Supports economic activities
Municipal services (sewage, waste management)	Services	Public health and sanitation	Promotes community health
Khadi and handloom fabrics	Textiles	Supports local artisans	Encourages cultural heritage
Fresh meat, fish, and poultry	Food	Nutritional Necessity	Supports local economies
Unprocessed salt and jaggery	Food	Basic food item	Affordable source of minerals
Human blood and vaccines	Medical	Essential for health	Vital for disease prevention
Public transportation (non-AC, metro, rail)	Transport	Accessibility and affordability	Promotes mobility for low-income individuals

Goods No Longer Exempt in 2024

Over time, the government revised the list of GST-exempt items to add more to its ambit of tax-attracting items to earn revenue from it. Other exempted goods are now liable to 12% and 5% rate of GST.

1. Branded varieties of cereals and pulses: There is no longer any exemption for branded or packaged grains, cereals and pulses. (VP)

2. Packaged drinking water: Bottled water comes under the GST regime even as natural water is kept out of its ambit.

3. On the other hand, pre-packaged and processed food like pickles, jams and sauces are taxed as well.

Why It Matters

A rethink in that list would not only help businesses stay on the right side of tax regulations but also make consumers aware of what GST-free products in India they can buy. Agriculture, education, and healthcare — the core of these sectors — rely on such exemptions to ensure the affordability of essential services and goods. The list of GST exemption notifications plays a crucial role in maintaining this balance. As India continues to grow, the evolution of GST will ensure that goods essential for living, like food, healthcare services, and education, remain tax-free, highlighting the government's efforts to shift toward a more tax-free lifestyle in India.

If you are unsure about online GST procedures, you might find How to Track GST Payment Status & GST Payment Failures helpful.

Conclusion

In a country of India's scale, GST exemptions are important in tax design for making essential goods such as fresh fruits and vegetables, milk and services like healthcare and education more affordable to low-income families. Reducing overall expenditures by as much as 5-8%, and directly benefiting as many households as tax exemptions are worth around Rs 22,000 crore a year in foregone revenue, with the money subsidies often going even to richer households. In the longer term, excluding healthcare and education helps to promote a more efficient environment for public health and educational outcomes which are key to socio-economic development.

Similarly, India has GST (no tax) on basic food items like South Africa. Although future reforms could extend the exemptions to new sectors such as renewable energy or digital services. Future research could help explain how such policies affect informal workers and small businesses in practice, central to ensuring proper protection of the most vulnerable segments of society and fostering more inclusive economic growth.

Experience a hassle-free GST compliance with Swipe!

Get ready for GST with Swipe, India's #1 GST billing and invoicing solution. Needless to say, you can manage your GST filings, exempt credits tracking and tax invoicing like never before irrespective of whether you are a small business or an enterprise. You can also get Powerful business analytics and Reports with Swipe.

Issue tax-exempt invoices & Stay compliant with the latest GST rules with our platform which requires no manual intervention and is easy to use.

Thousands of businesses in India already trust Swipe to make their GST process simple and smooth. Click here to begin a free trial today and get control of your business finances with ease!

Visit Swipe now!

FAQs

1.What are some GST-exempted goods?

A variety of essential items like fresh fruits, milk, cereals, pulses, eggs, textbooks, health services, and electricity are exempt from GST, helping keep costs low for consumers.

2.Are all food items GST-exempt?

No, not all food items are exempt. Only unprocessed, non-branded foods like fresh vegetables, cereals, and pulses are GST-free, while processed and packaged foods are subject to tax.

e.Are educational services exempt from GST?

Yes, educational services up to the higher secondary level are GST-exempt. This includes schools, ensuring that basic education remains affordable and accessible to all.

4.Are healthcare services GST-exempt?

Basic healthcare services, including hospital treatments and life-saving drugs, are exempt from GST, keeping these essential services more affordable for the general public.

5.Is drinking water exempt from GST?

Yes, but only non-bottled drinking water is GST-exempt. Packaged drinking water, such as bottled water, is subject toIGST, reflecting the added processing and packaging.