Did you know the difference between Nil rated/exempt/zero rated supply in GST?

Описание: Nil Rated Supply
• Definition: Goods or services that attract a GST rate of 0%.
• Input Tax Credit (ITC): Not available. Businesses cannot claim credit for GST paid on inputs.
• GST Reporting: Must be reported in GST returns but do not contribute to tax liability.
• Examples: Salt, grains, jaggery, some cereals.
• Tax Implication: No GST is charged to end customer, but suppliers cannot claim ITC on purchases related to these supplies.
2. Exempt Supply
• Definition: Goods/services that are specifically exempt from GST by law or notification. These are often essential goods and services.
• Input Tax Credit (ITC): Not available. ITC cannot be claimed on purchases used for exempt supply.
• GST Reporting: Reported separately in GST returns; no GST liability.
• Examples: Fresh milk, curd, bread, fruits, public transport, educational services.
• Tax Implication: No GST is charged, and suppliers cannot claim ITC. Aimed at keeping basic commodities affordable.
3. Zero Rated Supply
• Definition: Supplies made for export or to Special Economic Zones (SEZs), taxed at 0% GST.
• Input Tax Credit (ITC): Available and refundable. Businesses can claim a refund of ITC on inputs used.
• GST Reporting: Detailed reporting required for ITC refund claim.
• Examples: Export of goods/services, supply to SEZ units or developers.
• Tax Implication: No GST on output, but full ITC/refund allowed—makes exports internationally competitive by removing tax cost at every stage.