Zero Rated Supply under GST

Zero Rated Supply under GST

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Zero Rated Supply under GST

Export supplies of a taxpayer registered under GST are classified as zero rated supply. Zero rated supply under GST is eligible for refund. Taxpayers are required to furnish details of all zero rated supply in GSTR 3B return and GSTR 1 return.

What is Zero Rated Supply?

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. According to Section 16 of the IGST Act, zero rated supply means any of the following supplies of goods or services:

  • Export of goods or services or both;
  • Supply of goods or services or both to a Special Economic Zone developer
  • Supply of goods or services or both to a Special Economic Zone unit.

GST Refund for Zero Rated Supply

As exports are zero rated supply, the supplier will be eligible to claim input tax credit in respect of goods or services used for the supplies even though they might be non-taxable or even exempt supplies.

To claim GST refund for exports, the taxpayer can export under bond or LUT and claim refund or export on payment of IGST and claim refund.

Details to be Furnished in GST Returns

In GSTR 3B return and GSTR-1, all taxpayers must furnish details of all zero rated supply. In the following table showing GSTR 3B return, the taxpayer must provide details of all export supply in row B.

GSTR 3B Details of Outward Supplies
GSTR 3B Details of Outward Supplies

In GSTR-1 return, details of all export supply must be provided under the categories of exports, supplies made to SEZ unit or SEZ Developer and deemed exports.

GSTR-1 Zero rated supplies
GSTR-1 Zero rated supplies

Zero Rated vs Exempt Supply

Export and supplies to SEZ units or developers are classified as zero rated supply. On the other hand, nil or exempt supply are those supply with 0% GST rate.

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