Exemption from gst

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 April 2018 Is a unit registered u/s 8 of the Companies Act 1956 entitled for exemption from GST ? If so what is the nature of exemption?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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07 April 2018 please refer https://gstlatest.com/gst-applicable-on-section-8-company/

also, please note that section 8 is for Companies act 2013. Under companies act 1956, it was section 25

Querist : Anonymous

Querist : Anonymous (Querist)

08 April 2018 Thank you for your esteemed response. Request you further to apprise the following:

A. In case the case the Uit fulfills the conditions for exemption then how GST would be treated during the construction period and the implication on Depreciation once the Project is completed.

B. In case the Unit doesn't fulfill the conditions then whether GST paid during construction period would be allowed to be carried forward and will be available for set off.

Would appreciate your response. Thanks again.

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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08 April 2018 I am not sure what GST are you referring to? the amount paid to suppliers?

Querist : Anonymous

Querist : Anonymous (Querist)

08 April 2018 yes. The GST paid to suppliers during construction period.

Querist : Anonymous

Querist : Anonymous (Querist)

10 April 2018 A. In case the case the Unit fulfills the conditions for exemption then how GST would be treated during the construction period and the implication on Depreciation once the Project is completed.
B. In case the Unit doesn't fulfill the conditions then whether GST paid during construction period would be allowed to be carried forward and will be available for set off. (The GST paid to suppliers during construction period.
Would appreciate response.

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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21 July 2024 Under the GST regime in India, the registration under Section 8 of the Companies Act, 2013 (not 1956) pertains to companies incorporated for charitable or not-for-profit purposes. Such entities may qualify for exemption under GST, subject to specific conditions and provisions.

### A. Unit Fulfills Conditions for Exemption:
1. **Nature of Exemption**: If a unit registered under Section 8 of the Companies Act, 2013 fulfills the conditions for exemption under GST, it may be eligible for exemption from GST on certain supplies. Generally, exemptions are provided for activities related to charitable or not-for-profit purposes. However, specific exemptions are listed under the GST law and notifications issued by the government.

2. **GST During Construction Period**: During the construction period, if the unit is exempted from GST, it would mean that GST would not be applicable on the supplies received for construction. The unit would not charge GST on its outputs related to construction activities.

3. **Implication on Depreciation**: Once the construction project is completed, if the unit is exempted from GST, it implies that there would be no input tax credit (ITC) available on the GST paid during the construction period. This could impact the cost structure and, consequently, the depreciation calculations, as the GST component cannot be capitalized as part of the asset cost.

### B. Unit Does Not Fulfill Conditions for Exemption:
1. **Treatment of GST Paid During Construction**: If the unit does not qualify for GST exemption, GST paid during the construction period would be allowed as input tax credit. This means the GST paid on inputs (like construction materials, services, etc.) can be claimed as credit against the GST liability on outputs (sale of finished property or services).

2. **Carry Forward and Set Off**: GST paid on inputs during the construction period can be carried forward in the electronic credit ledger. It can be utilized for set off against GST liability on future supplies or outputs made by the unit. This helps in avoiding double taxation and ensures that GST is effectively neutral for businesses.

### Conclusion:
- **Exemption Eligibility**: Whether a unit registered under Section 8 of the Companies Act, 2013 is exempt from GST depends on fulfilling specific conditions and exemptions under GST law.
- **Impact During Construction**: Exemption impacts the applicability of GST during the construction phase and the availability of input tax credit.
- **Depreciation Implications**: For units exempt from GST, depreciation calculations need to account for the exclusion of GST from the capital cost.

It's essential for units falling under Section 8 of the Companies Act, 2013 to assess their eligibility for GST exemptions and comply with GST regulations accordingly. Professional advice from a GST consultant or tax advisor can provide tailored guidance based on specific circumstances and applicable GST notifications.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 July 2024 do not waste your time with 6 year old queries. respond to current ones. its not a competition!!

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