# Exemptions — Conceptual Foundation
## Key Definitions
| Term | Section | Meaning |
|---|---|---|
| Exempt supply | 2(47) | Supply of any goods/services/both that attracts nil rate of tax OR may be wholly exempt from tax, and includes non-taxable supply. |
| Non-taxable supply | 2(78) | Supply of goods/services/both not leviable to tax under CGST or IGST Act. |
Examples of non-taxable supply (outside GST levy): Alcoholic liquor for human consumption; Petroleum Crude; High Speed Diesel; Motor Spirit (Petrol); Natural Gas; Aviation Turbine Fuel.
## Power to grant exemption — Sec 11 of CGST Act / Sec 6 of IGST Act
The Government, on the recommendation of the Council and by notification, may exempt goods/services/both from tax. State GST laws contain mirror provisions for SGST.
## Four ways exemptions are framed
| Manner | Status that becomes immaterial | Example |
|---|---|---|
| (a) Specific activity/transaction | Supplier & recipient | Transfer of going concern; loading/unloading/packing/storage/warehousing of rice |
| (b) Specific supplier | Recipient & transaction | Services by CG/SG/UT/Local Authority where consideration ≤ ₹5,000; services by entity registered u/s 12AA/12AB by way of charitable activities |
| (c) Specific recipient | Supplier & transaction | Insurance scheme services to CG/SG/UT where total premium is paid by govt; training services to govt where ≥75% expenditure borne by govt |
| (d) Specific supplier AND recipient | — | NPS Trust services to its members for administrative fee |
## Types of exemption (compulsory vs optional)
1. Absolute / Unconditional — whole tax exempt → Registered person must not collect or pay tax.
2. Absolute / Unconditional — partial → cannot collect or pay tax beyond the effective rate.
3. Conditional exemption → registered person has option to avail or not.
## Retrospective clarificatory explanations
Govt may insert an explanation within 1 year of the notification/order for clarifying scope/applicability. Such an explanation has retrospective effect from the inception of the entry in the notification (not from the date the explanation was inserted).