What are difference between Nil Rated and exempted under GST

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Nil rated supplies are subject to GST at a 0% rate, meaning businesses can typically claim input tax credits on related purchases. Examples include exports and certain basic food items. In contrast, exempted supplies are entirely outside the GST regime, attracting no tax and preventing businesses from claiming input tax credits on any associated costs. Exempted items like healthcare and education are not taxed, and no ITC can be claimed.

Daya

Daya (Querist)
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10 November 2024 what are difference between Nil rated and Exempted under GST

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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10 November 2024 Nil Rated:
Definition: Goods or services that are subject to GST at a 0% rate are referred to as Nil rated. This means that the item or service is still covered under GST, but the tax rate applicable is zero.
GST Involved: The goods or services are technically taxable, but the rate of tax is 0%. The business can still claim input tax credit (ITC) on inputs used to provide Nil-rated goods or services.
Examples:
Export of goods and services (which are generally subject to a 0% rate).
Certain items like fresh fruits and vegetables.
Key Point: Nil-rated supplies are taxable but at a 0% rate, and businesses can usually claim input tax credits for the GST paid on their purchases related to these supplies.
2. Exempted:
Definition: Exempted goods or services are those that are not subject to GST at all. These are outside the scope of GST and are effectively not taxed under the GST law.
GST Involved: No GST is charged on exempted goods or services. Moreover, businesses dealing in exempted goods or services cannot claim input tax credit (ITC) for the GST paid on their purchases.
Examples:
Healthcare services by hospitals and medical practitioners.
Educational services.
Public transportation services.
Key Point: Exempted goods and services are completely out of the GST regime and cannot claim any input tax credit, even if GST was paid on their inputs.

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CA. Bhavik P. Chudasama

CA. Bhavik P. Chudasama (Expert)
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12 November 2024 Agree with the Expert's view just to add

as per GST Law, exempty supply includes all supply inlcuding NIL Rated and Non Taxable which means in exempt supply non gst goods are also covered

Sec 2 (47) "exempt supply" means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes nontaxable supply;

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