Business is a term that refers to an entity that engages in commercial, industrial, or professional activities. The Revised Model GST Law defines business as "any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit."
Exempt supplies refer to the goods or services that are not taxable under the GST regime. These supplies are exempted from GST and are not subject to any tax liability. The Revised Model GST Law categorizes exempt supplies into two categories, namely:
Nil Rate Supplies are goods or services that are exempt from GST, but the input tax credits are available for them. Exempt Supplies, on the other hand, are goods or services that are exempt from GST, but the input tax credits are not available for them.
The Revised Model GST Law has defined exempt supplies in Section 2(47) as "goods or services or both which attract nil rate of tax or which may be wholly exempt from tax under section 11, and includes non-taxable supply."
The Revised Model GST Law provides an exhaustive definition of business, which covers all kinds of activities. The definition includes any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit.
The definition of business is important as it determines whether a person is liable to register under GST or not. As per the GST law, any person who is engaged in a business and whose aggregate turnover exceeds the threshold limit of Rs 20 lakhs is required to register under GST.
The definition of business also helps in determining the place of supply in case of interstate transactions. The place of supply is important as it determines whether a transaction is an intra-state supply or an inter-state supply.
The Revised Model GST Law categorizes exempt supplies into two categories, namely nil rate supplies and exempt supplies.
Nil rate supplies are goods or services that are exempt from GST, but the input tax credits are available for them. Examples of nil rate supplies are fresh fruits and vegetables, milk, and books.
Nil rate supplies are important as they help in reducing the cost of essential goods and services. It also helps in reducing the burden of tax on the common man.
Exempt supplies are goods or services that are exempt from GST, but the input tax credits are not available for them. Examples of exempt supplies are healthcare services, education services, and some financial services.
Exempt supplies are important as they help in reducing the cost of essential services. It also helps in promoting social welfare by exempting certain services that are essential for the well-being of the society.
The Revised Model GST Law has defined business and exempt supplies in detail to provide clarity on the GST regime. The definition of business is important as it determines the liability to register under GST and the place of supply in case of interstate transactions. The categorization of exempt supplies into nil rate supplies and exempt supplies helps in reducing the burden of tax on the common man and promoting social welfare.
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