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Differences between Zero rated, Nil rated and Non Taxable Goods under GST Act?

IPCC 749 views 2 replies
What are the differences between Zero rated, Nil rated and Non Taxable Goods under GST Act?
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Quick Summary
Under GST, zero-rated supplies include exports and SEZ supplies where ITC is allowed and refund is available. Nil-rated goods have 0% tax but no ITC benefit. Non-taxable/exempt goods are outside GST or exempt by notification and also not eligible for ITC. Each category differs in tax treatment and ITC eligibility.

Zero-rated goods- These goods include exports and supplies to SEZ or SEZ developers. ITC can be claimed on these. Taxes paid on these goods are refunded.

Nil rated goods- Goods having a 0% GST. ITC cannot be claimed on these goods.

Exempted goods- These goods are either fully exempt or partially exempt. So simplifying it, a tax rate is applicable on these goods. CBIC issues a notification to exempt their taxability. ITC cannot be claimed.

1.Nil Rated Supply - Supply which is chargeable to nil rate of tax or 0% of tax. E.g Grains, salt etc.

2.Zero Rated Supply - It includes :

                                  a. Export of goods or services or

                                  b. Supply of goods or services to a SEZ developer or SEZ Unit

3. Non GST supplies: These supplies do not come under the purview of GST law. E.g. Alcohol for human consumption, Petrol etc.

4.Exempt Supplies - Supplies which are wholly exempt from tax under GST Act. E.g Fresh milk, Fresh fruits, Bread etc.

Hope it helps.


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