Tax exemption power allows government to exempt supplies by notification or special order, limiting collection to the effective rate.

Government, on the recommendations of the Council, may exempt specified goods or services generally by notification or in individual cases by special order; it may insert an explanation within one year to clarify scope and central notifications under the corresponding central enactment are deemed issued under this Act. Where an absolute exemption is granted, the registered supplier shall not collect tax in excess of the effective rate on such supplies.

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