What are non-GST, Nil-rated, Zero Rated & Exempt Supplies

GST is levied on supply of goods or services or both which falls within the purview of charging section under GST. Supply of goods or services may or may not attract tax. However, for determining the liability to pay the tax, one needs to further check whether such supply of goods and/or services are exempt from tax. The supply of goods or services are further classified into Taxable supply, Nil rated, Exempted, Zero rated and Non-GST supplies.

This document covers

Non-GST Supply
Nil Rated Supplies
Exempt Supplies
Zero Rated Supplies

1. Non-GST Supply

Non-GST Supply means supply of goods or services or both which is not leviable to tax under GST. Therefore these will be shown by you as your inward Non GST supply if you are availing theses supplies. No input tax credit is available in case of non-GST supplies. These supplies may attract

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

2. Nil Rated Supplies

Goods or services on which GST rate of 0 % is applicable are called NIL rated goods or services. Such goods or services, on which GST rate of 0% is applicable, are listed in schedule 1 under GST rate schedule. Input tax credit of inputs and or input services used in providing supply attracting Nil rate is not available i.e. no input tax credit on Nil rated supplies.

Examples: Jaggery, Salt, grains, Cereals etc.

3. Exempt Supplies

Exempt Supply means goods and services sold by the companies are free from Goods and Services Tax (GST). Since GST is a tax for common man, everyday items used by the common man have been included in the list of exempted items. No GST will be charged on these goods & services for company and business, GST paid on the assets, purchases or expenses for their businesses. Supplies are taxable but do not attract GST and for which ITC cannot be claimed in case of Exempt Supplies.

Examples: Live Fish, Fresh Milk & fruits, unpacked food grains, fresh vegetables, Curd, Bread etc.

Following points are to be noted for exempted supply:

There is no GST applicable on outward exempted supplies;
Input tax credit of inputs and / or input services used in providing exempted supply is not available i.e. no input tax credit on exempted supplies;
A registered person supplying exempted goods or services or both shall issue 'bill of supply' instead of tax invoice.

4. Zero Rated Supplies

Zero rated supplies mean supply of goods or services or both to SEZ or SEZ developer or Export of goods or services or both. GST is not applicable in India for exports. Hence, all export supplies of a taxpayer registered under GST would be classified as zero rated supply. The tax payer can claim the input tax credit or claim the refund of unutilized input tax credit. zero rated supply means any of the following supplies of goods or services.