0% or exempt
This query is : Resolved
24 September 2013
sir what is the difference between 0% rate goods or exempted goods?
Can a 0% sold goods able to get input credit?
CA Pallav Singhania
(Expert)
24 September 2013
There is sometimes confusion over what the difference between Zero-Rate VAT, VAT Exempt & Out of Scope VAT.
Zero-Rate VAT items, such as books, childrens clothes and some food, do have VAT on them, it’s just at zero percent, so the actual VAT is nil. However, Suppliers of zero-rated goods/services can still reclaim all their input VAT (the VAT on their own purchases.
VAT Exempt items, such as postage stamps, do not have VAT on them (not even at 0%). The VAT is nil. Suppliers of Exempt goods cannot reclaim the input VAT (the VAT on their own purchases) relating to Exempt Supplies.
Zero-Rate VAT items, such as books, childrens clothes and some food, do have VAT on them, it’s just at zero percent, so the actual VAT is nil. However, Suppliers of zero-rated goods/services can still reclaim all their input VAT (the VAT on their own purchases.
VAT Exempt items, such as postage stamps, do not have VAT on them (not even at 0%). The VAT is nil. Suppliers of Exempt goods cannot reclaim the input VAT (the VAT on their own purchases) relating to Exempt Supplies.
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