GST is not applicable on the supply, but it is important to know the difference especially for the purpose of filing correct GST returns and accurate claim of ITC. For example, export of mobile phones to Australia, providing bookkeeping services to a company located in New York. By zero rating it is meant that the entire supply chain of a particular zero-rated supply is tax-free i.
This is in contrast with exempted supplies, where only output is exempted from tax but tax is levied on the input side. The essence of zero rating is to make Indian goods and services competitive in the international market by ensuring that taxes do not get added to the cost of exports.
As per sub section 3 of Section 16 of Integrated Goods and Service Tax Act, a registered person making zero-rated supply shall be eligible to claim a refund under either of the following option, namely: —. Note: — As per sub section 2 of Section 16 of Integrated Goods and Service Tax Act, a registered person shall be eligible to claim a refund for zero-rated supplies even such supply is non-taxable or even exempt supply.
Schedules I of the GST act contains the goods which are nil-rated supply. For example, cereals, fresh fruits, and vegetables, salt, natural honey, milk, human blood etc. In other words, if any GST is paid on the goods or services or both used in providing nil rated supply then such GST credit is not available to the registered dealer. Supply of goods or services or both which are outside the purview of GST Act. In other words, they are not taxable under the GST Act and may be chargeable to tax under any local sales tax law or any other act.
VAT is not charged on these supplies, it is important to know the real difference between these supplies.
This is also important from a reporting perspective, because in VAT returns, a clear bifurcation of the value of each of these supplies is required to be furnished. Exempt supplies are specific supplies which have been declared as exempt. On these supplies, VAT should not be charged.
These are considered as taxable supplies. Hence, input tax can be recovered on supplies used to make zero rate supplies. As out of scope supplies are out of the purview of VAT, there is no concept of input tax recovery on such supplies.
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Log In. What is Zero-rating? What is VAT exempt? What are VAT exempt supplies?
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