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zero rated and exempt supplies

drishti makhija (article assistant) (50 Points)

25 May 2017

what is a difference between zero rated and exempt supplies??

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12 Replies

Shashank Kumar Tripathi (Practicing cost Accountant) (23 Points)
Replied 26 May 2017

Exempt is those supply and good which are noticed
zero rate under which tax rate is on output is zero.

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Studentsca (CA Practice ) (3577 Points)
Replied 26 May 2017

Exempt supplies are exempt from levy of GST whereas Zero rated supplies are supplies where output tax is levied at 0%.

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drishti makhija (article assistant) (50 Points)
Replied 26 May 2017

how does it make difference??

rohit (none) (186 Points)
Replied 26 May 2017

Export and Supplies to SEZ are termed as zero rated supplies. No tax on export but refund of ITC available.

Nil rated are taxed at 0%.

Exempt are for time being exempt under notification.

CA PRATIK DHRUVE (CHARTERED ACCOUNTANT) (634 Points)
Replied 26 May 2017

Zero-rated supply refers to items that are
– taxable, but the rate of tax is nil on their supplies and
– input tax relating to them can be availed.

Typically, items like books, essential commodities, exports etc are zero-rated. In Indian indirect tax law, no such concept exists. However, proposed GST laws borrows the concept of zero-rated.

As per the proposed GST Law, “zero rated supply” means any of the following taxable supply of goods and/or services, namely –
(a) export of goods and/or services; or
(b) supply of goods and/or services to a SEZ developer or an SEZ unit.

Further proviso to this section read “…credit of input tax may be availed for making zero-rated supplies, notwithstanding that
such supply may be an exempt supply”

It virtually means that if a supplier of goods/ services exports – no tax shall be charged on such supplied. Additionally, credit of input tax paid on service procured for providing such supplies.

However, in case of supplies to SEZ, the concept of Zero rated has been dealt differently. Under the proposed GST Law, a deeming fiction has been created wherein supply to and from SEZ shall be subject to IGST.

On conjoint reading of both the concepts, the only possible outcome is that zero-rating for SEZ has been done by way of refund. In other words, SEZ unit shall claim refund of tax paid on services procured by it. Thus, while there may not be any upfront exemption from tax, refund can be claimed.

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Ravi Vaghela (4 Points)
Replied 15 June 2017

is the tax for service provided to the Indian Railway been exempted ?

ashish (M.Com) (238 Points)
Replied 28 July 2017

We are book publisher, and our book exampted under gst law @ 0%

our job worker print our book with material @ charge 12% gst , so can i avil credit

we wait your answer

Rast Populous (Proprietor) (22 Points)
Replied 24 August 2017

Is it necessary to register under GST in case one is a freelancer and exclusively dealing with export of services (having no other domestic income except by way of export of services)?

Per my understanding, and also as clarified by the FAQ on the Central Board of Excise and Customs website: https://www.cbec.gov.in/resources//htdocs-cbec/gst/tweet-faq.pdf;jsessionid=03DB5C1D276516C077E7D2314A897E84 If a person is dealing only in either NIL rated or exempt goods/services, registration is not mandatory. (See Answer to Q20 in the FAQ link)

Can someone please share their views/inputs for the benefit of all.

lokesh (charted) (26 Points)
Replied 05 September 2017

i have a query on :LUT for export of services.here they told claim refund of tax - IGST for exports in cases of not having LUT. What is the rate of tax.they say export of services attracts zero rate of tax .kindly clarify

Tejas (asd) (22 Points)
Replied 08 September 2017

Hi friends,

I am running an export trader (buy goods from india and export). I'm a small person. I'm paying GST (Wheter Local or Central as applicable) on my purchases.

QUESTION PART I:-

Now according to my understanding for export I need to give my input GST details and the same is entered into the EDI system. Then apply for refund once Export proceeds are received and duly lodged in the system.

I'm being told by people that on output (Export Invoice) also I have to pay GST. Which I personally feel is ridiculous.

Is this true? If yes, then does the Govt want me to pay input GST, then the difference in Output and Input GST (Like what we used to do in a local sale under MVAT) and then claim the entire amount as refund?

Is it only me or does anyone else also feel that this is amounting to useless paperwork and if I may venture to say so far, double taxation (it doesn't matter that I get it back, the govt needlessly collects it, doesn't it?)

QUESTION PART II:-

If I give a bond / LUT for GST then do I have to pay input GST still, or I can buy goods without paying GST (like what we used to do for FORM H under MVAT)? Or is it applicable only for the exemption of output IGST on Exports?

Any help suggestions in this matter shall be helpful. And thanks a million in advance.

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Shradha (Finance Associate) (22 Points)
Replied 20 September 2017

Hi lokesh,

As per GST act ,if you are exporting goods or services,either you have the option to either:

1.Pay IGST and claim refund

2.Take LUT(iif you satisfy conditons prescribed in the act)/Bond with which you can export goods or services without payment of IGST.link provided of the circular : https://www.cbec.gov.in/resources//htdocs-cbec/gst/circularno-5-gst.pdf;jsessionid=55C7C65968F2C9D627DEEE34035E3A7A

If you go through the gst rate sheet in cbec.gov.in,you would get the rate for the product/service you are exporting.

https://cbec-gst.gov.in/gst-goods-services-rates.H T M L

Hope this helps you!