Nil Rated, Zero Rated, Non-GST and Exempted supplies


Nil Rated, Zero Rated, Non-GST and Exempted supplies



Nil-Rated Supply

Supply of goods and/or services (or both) which attract 0% GST rate is known as nil-rated supply. This comes under the Schedule I of the GST Act and includes goods likefresh fruits and vegetables.

  • Availability of Input Tax Credit: There is no tax credit input available for nil-rated supplies for inputs and/or input services provided by nil-rated supply.
  • GST Applicability: GST on nil-rated supplies is not applicable, therefore cannot be claimed.
  • Examples: Grains, salt, jaggery, etc are some examples of goods included in the nil-rated supply.

Zero Rated Supply

Any Supplies of goods or services (or both) made overseas or to Special Economic Zones (SEZs) or SEZ Developers come under the zero-rated supplies.

  • Availability of Input Tax Credit: ITC can be claimed in zero-rated supply.
  • GST Applicability: GST applies in two ways to zero-rated supplies
  1. The use of LOU (Letter of undertaking) and claiming a refund of unutilised GST for goods and services without any payment of GST.
  2. Paying IGST for supply of goods and services and then claiming a refund for the IGST paid on the supplies.

 Non-GST Supply(Non-Taxable Supply)

Non-GST Supplies have to follow local state or other tax laws. Goods and services supply entirely out of the GST law come under Non-GST Supply.

  • Availability of Input Tax Credit: The goods and/or services under non-taxable supplies do not have any tax input credit, and hence it can’t be claimed.
  • GST Applicability: GST for goods and/or services under non-taxable supply is not applicable.
  • Examples: Alcohol for human consumption and petroleum crude, high speed diesel, motor spirit, natural gases and aviation turbine fuel are included under non-taxable supply.

Exempted Supply

Exempt Supply means supply of any goods or services or both which attracts nil rated of tax or which may be wholly exempt under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes Non- Taxable supply.

  • Availability of Input Tax Credit: With respect to input and/or input services that are used for making availability of exempt supplies, no input credit can be claimed.
  • GST Applicability: For goods and services under exempted supply, GST is not applicable.
  • Examples: Exempted supply include puja samagri, cereals and live animals (except horses).



Krishnakant Jakhotia

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