A Clear explanation about Zero-rated supply with practical examples is readily available here in the below article. The confusion of Zero-rated supply with nil rated, non-GST supplies will be covered.
There are different categories of supplies based on our country’s GST schemes and procedures. We, the best GST consultants in Chennai, came through a lot of people wandering with a dilemma between nil-rated, non-GST, Zero-rated supplies. We sure believe the articles provided erstwhile helped many who perused our articles. In this article, we are honored to educate our followers and others about Zero-rated supply.
Explanation about Zero-rated supply
Supplies that are made to export overseas and to SEZ- Special Economic Zones or even Economic zone developers fall under the Zero-rated category. Here the entire value for the supply value of the chain is exempted from tax. This applies to both supply and service. Supply and Service are said to exempt when it attracts nil rate of duty, as per section 2(47) of the GST Act, 2017.
Refund of GST for Zero-rated supply:
- The Goods and supplies are not meant to be exempted from any tax, but the supplier can is eligible to claim the input tax credit for both goods and services.
- Based on the input tax credit, the refund can be claimed for both goods and services provided, supplied by the supplier without paying IGST.
- Even if a supplier paid IGST for the chain of supply of goods and services a refund can be claimed of the same.
Procedures for a refund:
- There is no separate procedure for claiming a refund for the Zero-rated supply. Filing for a refund does not have a separate form. Instead, an invoice for the shipping can be produced to get the refund.
- The invoice should possess the date and number. Otherwise, it will not be considered as an eligible document.
- Foreign inward remittance certificated shall be accepted as a valid document.
For SEZ refunds:
SEZ refund also has not any special procedure to apply or file for a refund. There are a few documents that are needed to be furnished, produced to claim the refund. For the supplies to special economic zones the following documents should be furnished:
- An invoice showing the number and date.
- Proof of receipts authorized by an official from the SEZ.
- Details about the payment method.
- A declaration from SEZ or Developer of SEZ explaining that input tax credit has not been claimed.
It is legitimately mentioned in section 54(6) of the CGST regulation act of 2017, ninety percent of the total amount can be claimed. This is based on the account of Zero-rated supply of goods and services by registered persons. This shall be based on a provisional basis. The provisional refund can be granted within seven working days. This is directly credited to the claimant’s account linked with him.
List of Zero-rated Supplies:
Goods fall under Zero-rate:
1. Essential foods- Grains, oil, salt, sugar, flour, eggs.
2. Agricultural products-paddy, wheat, Vegetables; both frozen and fresh.
3. Sea-foods- Fish-live, frozen, fresh and dried.
4. Meat- live animals and unprocessed meat.
5. Supplies that are provided to some specific areas.
1. Architecture and Engineering services provided outside or abroad. Any service that is provided outside of his own.
2. International Services: Transporting passengers from domestic to a foreign land.
1. Domestic use of electricity, only for the first 200 units.
2. Water services provided for domestic users.
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