Difference between Nil Rated, Exempted, Zero Rate and Non-GST | FAQ (2024)

FAQs

What is the difference between nil-rated exempt zero-rated and non GST supplies? ›

Nil-rated supply is a type of GST supply where the GST rate is also 0%, but the supplier cannot claim the input tax credit. Non-GST supply or non-taxable supply is a type of GST supply which does not attract any GST, and exempt supply is a type of GST supply which is exempt from GST.

A person who makes zero-rated supplies is always in a favourable GST position. They charge 0% GST on supplies but can obtain a refund for GST paid on relevant inputs. This is different from GST exempt suppliers who cannot charge GST or claim an input deduction.

Zero-rated goods are not taxed during sale, but producers can claim a credit for the value-added tax paid on inputs. On the other hand, exempt goods are not taxed either, but producers cannot get a credit for the VAT paid on inputs.

Fresh fruits, Fresh milk, Curd, Bread, etc. Exports and Supplies made to SEZ or SEZ Developers, of both goods and services. Grains, salt, Jaggery, etc. Alcohol used for human consumption, Natural gas, Petrol and its products, electricity, etc.

Often, goods and services that are zero-rated are those that are considered necessary, such as food items, sanitary products, and animal feeds. Examples of zero-rated goods include certain foods and beverages, exported goods, equipment for the disabled, prescription medications, water, and sewage services.

Some transactions are outside the scope of GST altogether because, for example, they are gifts, or made by unregistered people, or have no connection with Australia. Others are "GST-free" which means that the supplier does not charge GST but can claim credits for the GST on its own acquisitions.

If you are exporting goods to the USA and invoicing the USA company then this should be at the zero rate of VAT.

The difference between exempt and zero-rated transactions is that sales tax would never be charged on these types of transactions as they are essentially exempt at source. Also, unlike zero rated transactions, if you provide exempt goods or services, you cannot claim back sales tax (GST/HST) paid on expenses.

Employers handle the duty of withholding these taxes. Exempt employees may also qualify for pre-tax benefits like health insurance and retirement plans that may lower their tax liability. Non-exempt workers are also subject to federal, state, and local income taxes.

Zero Rated and exempted goods and products are similar to each other in that both do not charge VAT on goods and services sold.

What is zero-rated GST? ›

Zero-rated supply - GST is applied at 0% for the transaction. A GST-registered person charges GST at 0% on his zero-rated supplies, but he can claim the GST paid on his purchases to make those supplies. In Singapore, only exports of goods and international services are zero-rated.

The basic (and only) difference between exempt supply and NIL rated supply is that in case of exempt supply, the levy is at a rate higher than 0% as per tariff schedule but tax payable thereon is NIL due to issue of exemption notification u/s 11 of CGST Act or u/s 6 of IGST Act, whereas in case of Nil rated supply, the ...

Supplies which don't come under the scope of the GST are termed as Non-GST supplies. However, these supplies can attract taxes other than the GST as per the jurisdiction of the state or the country. Some examples of such supplies include petrol, alcohol, etc.

Non-GST Supply

Examples: Electricity, Diesel, Petrol and Alcohol for human consumption are some examples of Non GST supplies.

Supply of goods or services can either be taxable or tax-exempt. Taxable supplies are goods and services that attract GST. Tax-exempt supplies include supply of goods or services that belong to a specific category mentioned in the GST Act.

From a supplier under composition scheme, Exempt and Nil rated supply = Inter-state and Intra-State purchase of goods 0%, Exempt etc. Non GST supply = Goods that are not covered under GST.

Aggregate turnover = Value of [all taxable supplies + exempted supplies + NIL rated supplies + Zero rates supplies + Non GST supplies] – [Taxes and compensation cess + inward supplies + supplies under reverse charge] of a person having the same PAN across all his business entities in India.