Section 11 of CGST Act: GST Exemption Power, Notifications & Detailed Analysis by AUBSP

Section 11 of the CGST Act, 2017 empowers the Central Government, on the recommendation of the GST Council, to grant exemptions from GST on goods or services either generally through notifications or specifically in exceptional cases via special orders. It also allows clarifications to be added within one year of issuance to ensure proper interpretation.

A key example includes the exemption for intra-State services related to petroleum exploration. This provision helps the government provide tax relief in public interest while maintaining legal clarity. AUBSP offers an in-depth and authentic breakdown of this important GST section.

GST Section 11: Power to Grant Exemption under CGST Act

Greetings! If you’re exploring how the Government of India uses its authority to exempt goods or services from GST, you’re in the right place. I’m writing to guide you through Section 11 of the Central Goods and Services Tax (CGST) Act, 2017, a crucial provision that empowers the government to grant tax exemptions in public interest.

This detailed article explains the provisions, process, and implications of GST exemptions under this section. We’ve also included tables summarizing important dates and notifications for your quick reference.

Understanding Section 11 of the CGST Act

The power to grant exemption is a vital mechanism used by the Government to ensure GST does not adversely affect certain sectors or activities. Section 11 outlines the framework and limits of this power.

1. General Exemptions – Section 11(1)

Under sub-section (1), the Government may issue a notification to grant general exemptions to goods or services or both. These exemptions can be:

• Absolute, or
• Conditional (based on certain specified conditions)

✅ Key Requirement: These notifications can only be issued on the recommendation of the GST Council.

📅 Effective Date: The exemption becomes effective from the date mentioned in the notification.

Example:
If the Government sees that agricultural services need relief from GST, it may issue a general exemption notification making such services tax-free from a specific date.

2. Specific Exemptions – Section 11(2)

In exceptional circumstances, where a general notification is not suitable, the Government may issue a special order to exempt particular goods or services on a case-by-case basis.

✅ Condition: This special order must:

• Be based on public interest,
• Be recommended by the GST Council,
• Clearly mention the exceptional nature of the case.

Such exemptions are not general in nature and are usually limited to specific transactions or situations.

3. Clarificatory Explanations – Section 11(3)

Sometimes, ambiguity arises regarding an exemption notification or special order. In such cases, Section 11(3) allows the Government to insert an explanation to clarify the scope or applicability.

🕒 Time Limit: The explanation can be inserted within one year from the date of issue of the original notification/order.

📌 Effect: The explanation is deemed to have been part of the original notification/order from the beginning.

This helps ensure consistency and legal clarity for both taxpayers and tax authorities.

4. Explanation to Section 11

🔎 Important Note by AUBSP: When an absolute exemption is granted, a registered supplier cannot collect tax on such supply. Even if they wish to, the law doesn’t permit it.

This is to protect consumers from being wrongly charged GST on exempt supplies.

Notable GST Notification: Intra-State Services for Petroleum Exploration

Let us look at a practical application of Section 11:

Notification No. 5/2018-Central Tax (Rate)

G.S.R. 68(E) dated 25-01-2018

This notification exempts intra-State supply of services related to the grant of license or lease for petroleum exploration from central GST. This applies only to the portion of payment that represents the Central Government’s share of profit petroleum, as defined in the exploration contract.

📌 This notification is a perfect example of public-interest-based exemption issued under Section 11(1).

Final Thoughts by AUBSP

The power to grant GST exemption under Section 11 is not just a legal formality—it’s a critical policy tool. By utilizing this section, the Government can address social, economic, and environmental concerns in a flexible manner.

As explained by AUBSP, whether it’s a broad sectoral relief or a specific exemption for a unique scenario, Section 11 ensures that taxation remains balanced, fair, and in public interest.

Stay informed with AUBSP.com for more insightful and authentic explanations on GST and other tax laws.

FAQs on Section 11 of the CGST Act 2017

What is Section 11 of the CGST Act, 2017?
Section 11 of the Central Goods and Services Tax (CGST) Act, 2017 empowers the Central Government to grant GST exemptions on goods or services in public interest, based on the recommendations of the GST Council.

Who has the authority to grant GST exemptions under Section 11?
The Central Government has the authority to grant exemptions, but only upon the recommendation of the GST Council.

What types of GST exemptions are provided under Section 11?
There are two types: (1) General exemptions issued through notifications, and (2) Specific exemptions issued through special orders in exceptional circumstances.

What is the difference between general and specific exemption under GST?
General exemptions apply broadly to a class of goods or services and are issued via notification, while specific exemptions are case-specific and issued through special orders in exceptional cases.

Can the government add clarifications to exemption notifications?
Yes, under Section 11(3), the government can insert clarificatory explanations within one year of issuing the original notification or order.

Are explanations inserted under Section 11(3) retrospective?
Yes, such explanations are deemed to be part of the original notification or order from the date it was first issued.

Can a registered supplier collect tax on an absolutely exempted supply?
No, if an exemption is absolute, the supplier is not allowed to collect any GST on that supply.

What does ‘absolute exemption’ mean under GST?
It means a complete exemption from GST with no conditions attached. Suppliers must not charge GST on such supplies.

Is it mandatory to follow GST exemption notifications?
Yes, if an exemption is absolute, it must be followed strictly. Suppliers cannot choose to ignore it and charge GST anyway.

What is a conditional exemption under GST?
A conditional exemption is subject to certain specified conditions. The exemption applies only if those conditions are fully met.

What is the legal basis for GST exemption notifications?
GST exemptions are issued under the authority of Section 11(1) or 11(2) of the CGST Act, 2017, based on recommendations from the GST Council.

What is Notification No. 5/2018-Central Tax (Rate)?
This notification exempts intra-State supply of services related to petroleum exploration from central tax, when the consideration is paid as the government’s share of profit petroleum.

When did Section 11 of the CGST Act come into force?
Section 11 came into effect on 01 July 2017, as notified via Notification No. 9/2017-Central Tax dated 28 June 2017.

What is the role of the GST Council in Section 11?
The GST Council must recommend any exemptions before the Central Government can issue notifications or special orders under Section 11.

Can the government withdraw or amend GST exemption notifications?
Yes, the government can modify, withdraw, or replace GST exemption notifications as required, based on changing policy needs and Council recommendations.

Is there a time limit for issuing clarifications to exemption orders?
Yes, clarifications must be issued within one year from the date of the original exemption notification or special order.

How does Section 11 benefit taxpayers?
Section 11 provides relief to taxpayers by exempting certain goods or services from GST, thereby reducing tax burden and encouraging economic activity in key areas.

How can businesses stay updated on GST exemptions?
Businesses should regularly check official GST portals and reliable tax advisory platforms like AUBSP for updates on exemption notifications and clarifications.

Does Section 11 apply to both goods and services?
Yes, Section 11 covers exemptions for goods, services, or both.

Can State Governments issue exemptions under Section 11?
No, only the Central Government can issue exemptions under Section 11 of the CGST Act, based on the GST Council’s recommendations.

Are exemption notifications legally binding?
Yes, they are legally binding and must be complied with by all concerned parties unless withdrawn or amended officially.

What happens if a supplier wrongly collects GST on exempt goods/services?
Such collection is unlawful for absolute exemptions. The supplier may face penalties and may be required to refund the tax to the customer or the government.

How do I check if a product or service is exempt under GST?
You can refer to the latest exemption notifications issued by the Central Government or consult resources like AUBSP for simplified guidance.

Why are some services like petroleum exploration exempt from GST?
These exemptions are granted to promote investment and reduce costs in strategically important sectors like energy and natural resources.

What is the importance of AUBSP in understanding GST laws like Section 11?
AUBSP provides clear, detailed, and authentic interpretations of complex GST laws, helping taxpayers, professionals, and businesses stay compliant and informed.