Section 8 of UTGST Act, 2017: Power to Grant Exemption from Tax
Section 8 of the Union Territory Goods and Services Tax Act, 2017 empowers the Central Government, on the recommendations of the GST Council, to exempt specified goods or services from all or part of Union Territory GST (UTGST), subject to statutory requirements.
Section 8 - Statutory provisions
Sub-section (1). Where the Central Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the Council, by notification, exempt generally either absolutely or subject to such conditions as may be specified therein, goods or services or both of any specified description from the whole or any part of the tax leviable thereon with effect from such date as may be specified in such notification.
Sub-section (2). Where the Central Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the Council, by special order in each case, under circumstances of an exceptional nature to be stated in such order, exempt from payment of tax any goods or services or both on which tax is leviable.
Sub-section (3). The Central Government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be.
Sub-section (4). Any notification issued by the Central Government under sub-section (1) of section 11 or order issued under sub-section (2) of the said section of the Central Goods and Services Tax Act shall be deemed to be a notification or, as the case may be, an order issued under this Act.
Explanation. For the purposes of this section, where an exemption in respect of any goods or services or both from the whole or part of the tax leviable thereon has been granted absolutely, the registered person supplying such goods or services or both shall not collect the tax, in excess of the effective rate, on such supply of goods or services or both.
Meaning and operation of Section 8
Section 8(1): General exemptions by notification
The Central Government may grant a full or partial exemption for a defined class of goods, services or both when it considers an exemption necessary in the public interest and acts on the GST Council's recommendations. A notification may make relief unconditional (absolute) or dependent on specific eligibility, documentation, use or other conditions. The effective date is the date specified in the notification.
Section 8(2): Exceptional exemptions by special order
In exceptional circumstances, the Government may issue a case-specific special order exempting otherwise taxable supplies. The exceptional circumstances must be stated in the order, and the public-interest and Council-recommendation requirements apply.
Section 8(3): Clarificatory explanations
Within one year of the original notification or special order, the Government may insert an explanation clarifying its scope or application. Under this provision, the explanation is treated as part of the original instrument from its inception. This power concerns clarification and should be distinguished from an unrestricted power to create a new exemption retrospectively.
Section 8(4): Link to CGST exemptions
A notification issued under Section 11(1) of the CGST Act, or a special order issued under Section 11(2), is deemed to have been issued under the UTGST Act as well. Read the relevant notification and subsequent amendments to identify the actual scope, rate and conditions applicable to the supply.
Explanation: Limit on tax collection
Where an exemption is granted absolutely, the registered supplier cannot collect tax above the effective rate. For example, a fully exempt supply cannot be billed with UTGST merely because the supplier is registered. Exemption of output tax does not by itself establish eligibility to claim input tax credit; the relevant CGST Act credit restrictions must also be considered.
Important terms and related provisions
Exempt supply: Under Section 2(4) of the UTGST Act, this includes a supply attracting a nil rate, a supply exempt under UTGST Section 8 or IGST Section 6, and a non-taxable supply.
GST Council: The constitutional body established under Article 279A, whose recommendations are referenced in the statutory exemption process.
Absolute and conditional exemption: An absolute exemption applies as specified without additional exemption-specific conditions; a conditional exemption is available only when the conditions stated in the operative notification or order are met.
Related laws: Section 7 of the UTGST Act provides for levy and collection; Section 11 of the CGST Act governs central-tax exemptions; Section 6 of the IGST Act addresses integrated-tax exemptions. Credit implications may arise under Section 17 of the CGST Act.
How to check the applicable GST exemption
First identify the goods or services and their classification, then review the exemption entry, eligibility conditions, effective date, amendments and any relevant clarifications. A historical exemption notification may have been amended, superseded or withdrawn, so its original text alone may not establish the current treatment.
Official references: India Code - UTGST Act, 2017; CBIC - UTGST Act; CBIC - Union Territory Tax (Rate) notifications; CBIC - Central Tax (Rate) notifications. These official notification indexes should be consulted for later changes and the current effective exemption.
Practical point: A claim for exemption depends on the actual operative notification and the facts of the supply. Section 8 grants the power to exempt; it does not, by itself, exempt every supply or establish a universal exemption rate.