Nil Rated, Exempted, Non GST, Zero Rated Supply?

Nil Rated Supply

Supply of Goods as specified in Schedule – I and Services which is specifically declared as Nil GST rate in its GST rate list.

For Example:

In Case of Service –

(a) Services by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) by way of charitable activities,

(b) Services by the Employees’ State Insurance Corporation to persons governed under the Employees’ State Insurance Act, 1948 (34 of 1948),

(c) Services by the Reserve Bank of India,

In Case of Goods –

(d) Live asses, mules and hinnies,

(e) Live bovine animals,

(f)  Live swine,

(g) Curd; Lassi; Butter milk,

(h) Potatoes, fresh or chilled.

Non – GST Supply

Supply of Goods and/or Services on which GST in not leviable as per GST Act is called as Non-GST Supply.

For Example:

In Case of Service –

(a) Electricity Distribution Service,

(b) Water Distribution Service,

(c) Gas Distribution Service

In Case of Goods –

(d) Diesel & Petrol Supply

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.

No tax on the outward exempted supplies, however, the input supplies used for making exempt supplies to be taxed

Credit of input tax needs to be reversed, if taken; No ITC on the exempted 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.

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 registered person supplying exempted goods or services or both shall issue, instead of a tax invoice, a bill of supply

Zero Rated Supply

Zero-rated supply shall have the meaning assigned to it in section 16, By zero rating it is meant that the entire value chain of the supply is exempt from tax. This means that in case of zero rating, not only is the output exempt from payment of tax, there is no bar on taking/availing credit of taxes paid on the input side for making/providing the output supply. All supplies need not be zero-rated.

As per the GST Law exports are meant to be zero rated the zero rating principle is applied in letter and spirit for exports and supplies to SEZ.

The relevant provisions are contained in Section 16(1) of the IGST Act, 2017, which states that “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.

As already seen, the concept of zero rating of supplies requires the supplies as well as the inputs or input services used in supplying the supplies to be free of GST.

This is done by employing the following means:

(a) The taxes paid on the supplies which are zero rated are refunded;

(b) The credit of inputs/ input services is fully allowed even if such supply is an exempt supply;

(c) Wherever the supplies are exempted, or the supplies are made without payment of tax, the taxes paid on the inputs or input services i.e. the unutilized input tax credit is refunded.

(d) Normal tax invoice shall be issued