GST SCHEME: EXEMPTIONS
The prevalent indirect tax
The 13th Finance commissionís Task Force is of the view that there should not be any exemption from CGST and SGST. However, if for some reason, it is considered necessary to provide exemption, the centre and states should draw up a common exemption list which should be restricted to the following:
a) All public services of Government (Central, state and municipal / panchayati raj) including civil administration, health services and formal education services provided by Govt. schools and colleges, Defence, Para-military, Police, Intelligence and Govt. departments.
Public services will not include:
ii) Post and Telegraph
iii) Other commercial departments
iv) Public sector enterprises
v) Banks and Insurance
vi) Health and Education services
b) Any service transactions between an employer and employee either as a service provider, recipient or vice-versa.
c) Any unprocessed food article which is covered under the public distribution system should be exempt regardless of the outlet through which it is sold.
d) Education services provided by non-governmental schools and colleges.
e) Health services provided by non-governmental agencies.
The exemption list proposed
by the Task Force leaves a corner for debate as it consists of services which
are rendered by the government in the course of the discharge of the sovereign
functions of the state. Sovereign functions are maintenance of law and order,
collection of taxes, maintenance of military, and international relations.
They are not taxable at all and so there is no question of exempting them. The
CESTAT, in a recent judgement in the case of Dy Director of Mines and
Geological Department vs. CCE & C,
Department of Revenue (DOR) in its comment on the first discussion paper on GST favoured for a common list of exemptions for CGST and SGST. Efforts will be made by centre to substantially reduce the number of items presently exempted under CENVAT regime. Around 99 items presently exempted under VAT may continue to remain exempted in GST regime. There should be no scope, with individual states, for expansion of this list even for goods of local importance.