Zero Rated Supply Under GST

Export supplies made by a GST-registered taxpayer are treated as zero-rated supplies. GST zero-rated supplies are eligible for a refund. In their GSTR 3B and GSTR 1 returns, taxpayers must specify all zero-rated supplies.

What is Zero Rated Supply?

  • There is no GST on exports in India. As a result, a GST-registered taxpayer’s export supplies are treated as zero-rated. According to Section 16 of the IGST Act, a zero-rated supply is any of the following commodities or services:
  • Commodities, services, or a mix of the two are exported;
  • Providing goods or services to a Special Economic Zone developer
  • Providing goods or services to a Special Economic Zone unit, or both.

GST Refund for Zero Rated Supply

According to GST rules, the supplier can claim an input tax credit for products or services used in the supplies because exports are treated as zero-rated supplies, even if they are labeled as non-taxable or even exempt.

The taxpayer can seek a GST refund for exports by exporting under bond or LUT, or by exporting after paying IGST and claiming a refund.

Details to be Furnished in GST Returns

All taxpayers must report all zero-rated supplies on their GSTR 3B and GSTR-1 returns. The taxpayer must specify all export supplies in row B of the GSTR 3B return, as shown in the table below.

Details of all export supplies must be included in the GSTR-1 return in the categories of exports, supplies to an SEZ unit or SEZ Developer, and presumed exports…  


Zero Rated vs Exempt Supply

Zero-rated supplies include exports and supplies to SEZ units or developers. Nil or exempt supplies, on the other hand, are those that have a 0% GST charge.

Exempted supply refers to any supply of goods or services, or both, that is tax-free or partially tax-free under section 11 of the CGST Act or section 6 of the IGST Act, and includes non-taxable supplies.

The exempted supply is described as follows:

  • Outward exempted supplies are not subject to GST.
  • There is no input tax credit available for inputs and/or input services used in supplying exempted supplies, i.e. no input tax credit on exempted supplies.
  • Instead of a tax invoice, a registered person supplying exempted goods or services or both must issue a ‘bill of supply.’