Difference between zero rated supplies and exempted supplies under GST


0
Zero Rating Supply:

As per Section 16(1) of the IGST Act, 2017, “zero rated supply” means any of the following supplies of goods or services or both, namely: –

(a) export of goods or services or both; or
(b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.

Exempted Supply:

“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 of CGST Act or under section 6 of the IGST Act, and includes non-taxable supply

The difference between zero rated supplies and exempted supplies is tabulated as below:

EXEMPTED SUPPLIESZERO RATED SUPPLIES
“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 of CGST
Act or under section 6 of the IGST
Act, and includes non-taxable
supply
“zero-rated supply” shall have the
meaning assigned to it in section 16
No tax on the outward exempted
supplies, however, the input
supplies used for making exempt
supplies to be taxed
No tax on the outward supplies;
Input supplies also to be tax free
Credit of input tax needs to be
reversed, if taken; No ITC on the
exempted supplies
Credit of input tax may be availed
for making zero-rated supplies,
even if such supply is an exempt
supplyITC allowed on zero-rated
supplies
Value of exempt supplies, for
apportionment of ITC, shall
include supplies on which
the recipient is liable to pay
tax on reverse charge basis,
transactions in securities, sale of
land and, subject to clause (b) of
paragraph 5 of Schedule II, sale
of building.
Value of zero rated supplies shall
be added along with the taxable
supplies for apportionment of ITC
Any person engaged exclusively
in the business of supplying
goods or services or both that
are not liable to tax or wholly
exempt from tax under the CGST
or IGST Act shall not be liable to
registration
A person exclusively making zero
rated supplies may have to register
as refunds of unutilised ITC or
integrated tax paid shall have to be
claimed
A registered person supplying
exempted goods or services or
both shall issue, instead of a tax
invoice, a bill of supply
Normal tax invoice shall be issued

Like it? Share with your friends!

0

0 Comments

Your email address will not be published. Required fields are marked *