# Services Provided by Government – Exemptions

## Key Definitions

### Government [Section 2(53)]

CG: Central Government
SG/UT: as defined in respective Acts
NOT covered: Regulatory bodies like CCI, Press Council, DGCA, Forward Market Commission, Inland Water Supply Authority, CPCB, SEBI — they are NOT 'Government'

### Local Authority [Section 2(69)]

Panchayat (Art 243)
Municipality (Art 243P)
Municipal Committee, Zilla Parishad, District Board, any body entrusted with municipal/local fund
Cantonment Board
Regional/District Council under Sixth Schedule
Development Board under Art 371 & 371J
Regional Council under Art 371A

NOT 'local authority': Delhi Development Authority and other development authorities set up by State Governments (even if locally called 'local body').

### Governmental Authority

Set up by Act of Parliament/State Legislature, OR established by Government, with ≥ 90% participation by equity/control
Carries out functions entrusted under Article 243W (Municipality) or 243G (Panchayat)

### Government Entity

Authority/board/society/trust/corporation
Set up by Act or established by Government with ≥ 90% participation by equity/control
Carries out any function entrusted by CG/SG/UT/local authority (broader than Governmental Authority)

## Important Exemption Entries (Snapshot)

Entry	Coverage
4	Services by governmental authority – function entrusted under Art 243W (Municipality)
5	Services by governmental authority – function entrusted under Art 243G (Panchayat)
6	Services by CG/SG/UT/local authority — EXCEPT: (a) Posts & Indian Railways; (b) Aircraft/vessel services in port/airport; (c) Transport of goods/passengers; (d) Services to business entities
7	Services by CG/SG/UT/LA to business entity below registration threshold in preceding FY (excludes 6(a)(b)(c) and renting of immovable property)
8	Services by one government body to another (excludes 6(a)(b)(c))
9	Govt services where consideration ≤ Rs.5,000 (Rs.5,000 in a FY for continuous supply) (excludes 6(a)(b)(c))
9C	Service by Government Entity to CG/SG/UT/LA against grants received
9D	Old age home (CG/SG or 12AA/12AB entity) to residents ≥ 60 years against ≤ Rs.25,000/month (inclusive of boarding, lodging, maintenance)
9E	Indian Railways to individuals – platform tickets, retiring/waiting rooms, cloak room, battery-operated car
9F	Inter-zone/division services within Indian Railways
24C	Post card, inland letter, book post, ordinary post (envelopes < 10 grams)
34A	CG/SG/UT guarantee on loans of its undertakings/PSUs from banks/FIs
47	Registration; testing/calibration/safety/fire license required under law
61	Passport, visa, driving license, birth/death certificate
62	Tolerating non-performance of contract — fines/liquidated damages payable to govt
63	Assignment of right to use natural resources to individual farmer (NOT for rearing of horses)
65	Merchant Overtime charges – deputing officers after hours/holidays for import-export cargo
65B	SG to Excess Royalty Collection Contractor (ERCC) – assigning right to collect royalty (conditional)
74A	Rehabilitation professionals at govt-established medical/educational/rehab centres

## Specified Services (NOT Exempt — Taxable Always)

(a) Postal & Railway services

(b) Aircraft/vessel services in/outside port/airport precincts

## Taxability of Government Services to Business Entities

Situation	Treatment
Service to business entity below registration threshold in preceding FY	Exempt (Entry 7) — but NOT for specified services or renting of immovable property
Specified services to business entity (any turnover)	Taxable – Forward Charge (FCM)
Other services to business entity above threshold	Taxable – Reverse Charge (RCM)
Renting of immovable property by CG/SG/UT/LA (except Railways) to registered person	Taxable – RCM

## Department of Posts

Basic mail services: post card, inland letter, book post, ordinary post (envelope < 10 g) → EXEMPT (Entry 24C)
Other services (speed post, registered post, financial, agency services): TAXABLE – Forward Charge (RCM does NOT apply)

## Other Key Clarifications

Mess accommodation by Air Force/Army/Navy/Paramilitary/Police to personnel or non-business entities → EXEMPT (Entry 6)
Inter-departmental Government services (non-specified) → EXEMPT (Entry 8)
Functions under Art 243G/243W by governmental authority → EXEMPT (Entries 4 & 5)
Police/security services to PSUs, corporates, private events → TAXABLE under RCM
Tolerating non-performance (fines, liquidated damages to govt) → EXEMPT (Entry 62)

## ERCC (Entry 65B) – Conditional Adjustment

At end of contract, ERCC must submit account
If GST paid by mining lease holders on royalty ≥ GST exempted to ERCC → full exemption stands
If less → exemption restricted to GST paid by lease holders; ERCC must pay the difference

Worked example

### Example 1

Example 1 – Police Security to Cricket Association: Karnataka Cricket Association requests Commissioner of Police to provide security for a cricket match. Police arrange security for consideration. Treatment: Service by Government to business entity (private event) → TAXABLE under RCM; Karnataka Cricket Association liable to pay GST under reverse charge.

### Example 2

Example 2 – Mess Accommodation: Army mess provides accommodation services to defence personnel. Treatment: Exempt under Entry 6 (accommodation by armed force/police mess to personnel/non-business entities is exempt).

### Example 3

Example 3 – Government Inter-Departmental Service: Income Tax Department avails office maintenance services from another government department. Treatment: Service by one government department to another → EXEMPT under Entry 8 (provided not a specified service).

### Example 4

Example 4 – Postal Services: Department of Posts collects Rs.4 for a post card and Rs.45 for Speed Post. Post card → EXEMPT (Entry 24C); Speed Post → TAXABLE under forward charge (RCM does not apply).

### Example 5

Example 5 – Small Consideration: A panchayat provides a service to ABC Ltd for Rs.4,000 (one-time). Since consideration ≤ Rs.5,000 and not a specified service → EXEMPT under Entry 9. If continuous supply, the Rs.5,000 limit applies in a FY.

### Example 6

Example 6 – Old Age Home: A trust registered u/s 12AB runs an old-age home; charges residents (aged 65) Rs.22,000/month inclusive of boarding/lodging/maintenance → EXEMPT under Entry 9D. If it charges Rs.28,000/month → TAXABLE.

⚠️ Common exam mistakes

Treating SEBI, CCI, DGCA as 'Government' — they are regulatory bodies and NOT government.
Treating Delhi Development Authority as a 'local authority' — it is not.
Confusing 'Governmental Authority' (only 243G/243W functions) with 'Government Entity' (any function entrusted).
Applying small consideration exemption (Entry 9) to specified services — does NOT apply to Posts, Railways, aircraft/vessel services, or transport of goods/passengers.
Assuming postal services are entirely exempt — only post card, inland letter, book post, and ordinary post (env < 10g) are exempt; speed post/registered post are taxable under FCM (not RCM).
Treating renting of immovable property by Government to business below threshold as exempt under Entry 7 — Entry 7 specifically excludes renting of immovable property.
Assuming all govt-to-business services are RCM — specified services [6(a)(b)(c)] are FCM, not RCM.
Applying Entry 63 (natural resources to farmers) to horse rearing — horse rearing is excluded.
Ignoring the ERCC adjustment mechanism — exemption is conditional on GST paid by mining lease holders.

Bare-Act text Entries 4, 5, 6, 7, 8, 9, 9C, 9D, 9E, 9F, 24C, 34A, 47, 61, 62, 63, 65, 65B, 74A; Sections 2(53) & 2(69) · Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017; CGST Act, 2017 · click to expand

Entry 6 (Notification No. 12/2017-CT(R)): Services by Central Government, State Government, Union territory or local authority excluding the following services — (a) services by the Department of Posts and the Ministry of Railways (Indian Railways); (b) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; (c) transport of goods or passengers; or (d) any service, other than services covered under entries (a) to (c) above, provided to business entities. Entry 7: Services provided by CG/SG/UT/LA to a business entity with aggregate turnover of up to such amount in preceding FY as makes it eligible for exemption from registration under CGST Act, 2017 — but excluding 6(a)(b)(c) and renting of immovable property. Entry 8: Services provided by CG/SG/UT/LA to another CG/SG/UT/LA — excluding 6(a)(b)(c). Entry 9: Services where consideration ≤ Rs.5,000 (Rs.5,000 in a FY for continuous supply). Section 2(53) defines 'Government'; Section 2(69) defines 'local authority'.

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Services Provided by Government (CG/SG/UT/Local Authority)

Worked example

⚠️ Common exam mistakes