0 GST- What Is Zero Rated Supply?

0 GST Goods and services are levied on the goods and services that are considered to be in everyday use by the common citizens of the country. Hence are made tax-free. You might have heard about the different types of Goods and Service Taxes (GST) that are imposed on products and services in India. As a citizen of the country, we all pay these taxes for the services we avail. However, if we own a business based on supply, then there are some products on which there is no GST imposed by the government.

Let us discuss some of these products and services and also get detailed insights on 0 GST items in this article.

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What is Zero Rated Supply?

Zero Rated supply refers to the products and services for which the supplier does not have to pay any taxes. This is mainly done in the transportation of goods or services in India.

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A zero-rated supply and 0 gst items are different. On exempted supply, you cannot claim any refunds or Input Tax Credits from the government. This Zero-rated supply gives you an option to claim your refund too. In this article, we will through some important insights into these types of supply items or services.

0 GST Items: Key Takeaways

The zero rated supplies are the products and services for which the suppliers do not have to pay taxes.
Suppliers get the advantage of claiming Input Tax Credits (ITC) on these items.
The zero rated supply items are available for Tax benefits, unlike the other categories like 0 GST items, Nil-rated items, and Non-GST items and services.

Difference between 0 GST Items and Zero Rated Supply

Let us know some of the major differences between Zero-rated supply and 0 GST items on products and services in India.

Zero Rated Supply	0 GST items
Goods and services that are taxable but taxed at 0% GST. Businesses can claim input tax credits for purchases related to these supplies.	Goods and services that attract a GST rate of 0%. Businesses cannot claim input tax credits for purchases related to these items
Input Tax credit is available in zero-rated supplies.	The input tax credit is not available on Zero-rated supplies.
These supplies of products and services are taxable but at 0 percent.	0 gst items are taxable at 0%.
Required to be reported as taxable supplies	Required to be reported but as non-taxable supplies
Allows for claiming input tax credits, thus reducing overall tax liability	No input tax credits can be claimed, increasing the overall tax burden
For example, Exported goods and services, international transportation services	For example, certain agricultural products, certain educational services

How to Claim GST Refund for Zero-Rated Supply?

There are certain criteria on which a supplier can claim a refund over the GST items. Either the supplier can supply a product or service without paying any Integrated Goods and Services Tax (IGST) or the supplier can export the products by paying the IGST amount and claim a direct refund of the IGST paid for the financial year.

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However, must be noted that the supplier cannot change the option chosen for the same financial year.

Different Categories Based on the Types of Supply

Many times we are not able to tell the difference between zero-rated supply, 0 gst items, nil-rated items, and exempted categories, but all these categories are different.

Supply	0 GST Items	Non GST	Exempted
GST Applicable	YES (0%)	Yes (0%)	No
Types of Supply	SEZ Supply or Exports	Outside the purview of GST	Inter-state or intra-state
Eligibility for ITC	Available	Not available	Not available

The major difference between all these categories is whether they are eligible for Input tax credits or not.

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0 GST Items FAQs

Q1. What is Zero rated Supply?

Ans: Zero rated supplies are the export and import of goods and services where suppliers do not have to pay any additional taxes.

Q2. Can Suppliers Claim Input Tax Credits (ITC)?

Ans: Yes, suppliers can claim Input Tax Credit (ITC) benefits on the products and supplies.

Q3. What are some of the products under the 0 GST slab?

Ans: Some of the products under 0 GST slabs are Fresh fruits, milk, vegetables, education, health, etc.

Q4. What is an example of Zero rated supply?

Ans: Some of the goods and services that are considered necessary for every citizen fall under the zero-rated supplies. Suppliers do not have to pay any taxes for these products, such as sanitary products, animal feeds, healthcare, food items, etc.