Zero Rated, Exempted and Nil rated supply in GST

Zero Rated, Exempted and Nil rated supply in GST

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Zero Rated, Exempted and Nil rated supply in GST

Zero Rated Supplies

As per section 16 of IGST Act,2017  “zero rated supply” means any of the following supplies of goods or services  or both, namely-

  • Export of goods or services or both; or
  • Supply of goods or services or both to a special economic zone developer or a special economic zone unit.

 Refund of Zero Rated Supplies in GST

 A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:-

 He may supply goods or services or both under bond or letter of undertaking, without payment of IGST and claim refund of unutilised tax credit or

He may supply goods or services or both on payment of IGST and claim refund of such tax paid on goods or services or both supplied.

Exempted goods and services

Exempt supply is defined under section 2(47) of the CGST Act, 2017 as reproduced below-

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.

Nil rated

It is the supply of goods and services that have 0% tax rate.

Nil rated supply is not defined anywhere in GST Law.  The basic difference between nil rated and exempt supply is that the tariff is higher than 0% in case of exempt supply. But there is no tax payable due to exemption notification. Whereas in case of  Nil rated supply, the tariff is at Nil rate so there is no tax without the exemption notification.

 

 


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