Difference between nil rated and zero rated supplies
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Question: In any GST Law, any supply of goods or services or both is either a supply leviable to tax or a supply not leviable to tax. Supplies leviable to tax are those supplies on which the charging section of the Act (Tax levy provision) provides for levy of tax. Charging section also provides the base or measure of tax. So far as it is related to the rate of tax, the law may either provide rates of the tax itself or it may, with necessary guidelines, delegate powers to the Government for notifying rates of tax. Tax cannot be levied on supplies which are not leviable to tax. My quests are:
1. Whether Zero-rated supply is leviable to tax under the IGST Act? If the answer is Yes, then what is the rate of tax?
2. If in respect of zero-rated supplies, the rate of tax is zero, then what is the difference in between nil rate of tax and zero rates of tax?
(Asked by Keshav Dayal)Answer: 1. In GST In GST, Zero-rated supplies are the ones which are executed under Section 16 of the IGST Act. It includes :
- Export of goods or services or both
- Supply of goods or services or both to an SEZ developer or SEZ Unit.
Zero-rated does not mean the supplies taxable to 0% rate.
2. Zero-rated is not chargeable to 0% tax rate while nil rated is chargeable to the said rate of 0%.
The detailed content on the topic can be found at https://taxgrid.in/2017/08/16/difference-nil-rated-zero-rated-exempt-supplies/
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Dear Sir,
With due respect, I would like to mention that section 16(1) of the IGST Act, simply provides the names of supplies which are to be treated “Zero-rated supplies”. It does not mention about the treatment except admissibility of Input Tax Credit in sub-section (2). You will agree that such supplies have been defined as “supplies in the course of inter-State trade or commerce” in sub-section (5) of section 7 of the IGST Act. Rates of tax have been defined for inter-State supplies. In view this, unless overriding effect is given to those rates, it cannot be said that tax is not payable on such supplies. Actually Zero-rated are considered to be the supplies free from any element of tax. But there is no standard definition of zero-rated supplies or sales.
I will highly be obliged for your assistance on the same.
With regards,
Keshav Dayal -
Dear Sir,
Section 16 of IGST act, specifically begins with the words “Zero-rated supply means… “. So IGST Act intends to define zero-rated supply in section 16. Also Section 2(23) of IGST Act says that “zero-rated supply” shall have the meaning assigned to it in section 16. Moreover Section 7(5) defines the scope of inter-state supply.
As mentioned by you the rates for interstate supplies notified by government shall be applicable on interstate supplies. It’s just that the concept of zero rated supplies have been introduced with two options. Here the dictionary meaning of Zero rated supplies differs from what is the meaning given in IGST Act.
If you have anything else please feel free to reply. -
Dear Priyanshu
You are requested kindly to visit link http://www.taxtalkindia.com/docsGst/GstArticles/MayBeWrong.aspx -
Can I get a refund for exempted item under hsn code 8201.
If yes then how I can proceed.
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Section 16 of IGST act, specifically begins with the words “Zero-rated supply means… “. So IGST Act intends to define zero-rated supply in section 16. Also Section 2(23) of IGST Act says that “zero-rated supply” shall have the meaning assigned to it in section 16. Moreover Section 7(5) defines the scope of inter-state supply.
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