Section 11 – Power to grant exemption
Section 11 of CGST Act, 2017 – Power to Grant Exemption
Updated on: February 2026 (as amended and applicable till date)
Prepared by: Yours Tax Consultant
1. Bare Act Text – Section 11 (Effective Provisions)
Section 11(1):
Where the Government is satisfied that it is necessary in the public interest,
it may, on the recommendations of the Council, by notification,
exempt generally, either absolutely or subject to such conditions as may be specified,
goods or services or both of any specified description
from the whole or any part of the tax leviable thereon.
Section 11(2):
The Government may, if it considers necessary or expedient in the public interest,
exempt by special order, under circumstances of an exceptional nature,
any goods or services or both on which tax is leviable.
2. Objective of Section 11
Section 11 empowers the Government to grant exemption from CGST to specified goods or services in public interest.
This provision enables:
- Relief to specific sectors or industries
- Implementation of welfare policies
- Ease of doing business
3. Types of Exemptions under Section 11
🔹 General Exemption – Section 11(1)
A general exemption:
- Is issued through a notification
- Applies to a class of goods or services
- May be absolute or conditional
Most GST exemption notifications are issued under Section 11(1).
🔹 Special Exemption – Section 11(2)
A special exemption:
- Is issued through a special order
- Applies to exceptional or specific cases
- Is not general in nature
Such exemptions are rare and case-specific.
4. Absolute vs Conditional Exemption
Absolute Exemption
Where exemption is absolute:
- Taxpayer cannot opt to pay tax voluntarily
- GST must not be charged
Conditional Exemption
Where exemption is subject to conditions:
- Conditions must be strictly complied with
- Non-compliance results in denial of exemption
Courts have consistently held that conditions in exemption notifications must be strictly interpreted.
5. Power Exercised Only on GST Council Recommendation
Exemptions under Section 11 can be granted only:
- On recommendation of the GST Council
- In public interest
Any exemption without Council recommendation is legally unsustainable.
6. Section 11 Read with Relevant CGST Rules
Exemptions granted under Section 11 must be read with the following CGST Rules:
- Rule 42 – Reversal of ITC for exempt supplies (inputs & services)
- Rule 43 – Reversal of ITC for exempt supplies (capital goods)
- Rule 45 – ITC implications for exempt supplies (job work related)
These rules govern input tax credit consequences when supplies are exempt under Section 11.
7. Impact of Exemption on Input Tax Credit (ITC)
Where supplies are exempt:
- ITC attributable to exempt supplies is not available
- Proportionate reversal of ITC is mandatory
This aspect is often ignored and leads to audit objections.
8. Withdrawal or Modification of Exemption
The Government has the power to:
- Modify an exemption
- Withdraw an exemption
Such withdrawal generally operates prospectively unless specifically stated otherwise.
9. Litigation Aspects of Section 11
Common disputes under Section 11 involve:
- Interpretation of exemption conditions
- Eligibility of goods or services
- Denial of exemption due to procedural lapses
Courts have held that:
- Exemption provisions must be strictly construed
- Burden of proof lies on the person claiming exemption
10. Related Provisions
- Section 9 – Levy and Collection of Tax
- Section 16 – Eligibility and Conditions for ITC
- Section 17 – Apportionment of Credit
11. Professional Tip
Never claim GST exemption casually. Always verify the exact notification, conditions, HSN/SAC coverage and ITC implications. A wrongly claimed exemption can be costlier than paying tax.
Disclaimer: This article is based on the CGST Act, exemption notifications, CGST Rules and legal position applicable till date. Future amendments or judicial pronouncements may change the interpretation.
Comments