What is Zero Rated Supply
In any country, the export of goods and services plays a major role in maintaining a country’s economic growth. Therefore, in order to boost the same, the government provides such businesses with certain reliefs and perks. One such relief provided in the Indian Taxation system, GST is Zero-Rated Supplies.
When is a Zero Rated Supply applicable
In India, GST is not applicable to any exports, which makes all the exports in India, Zero Rated Supplies. As per Section 16 of the IGST Act, zero-rated supply is applicable in case of following supplies of goods and services:
Difference Between Exempted, Zero Rated, Nil Rated and Non-GST.
The Difference between exempted supplies, Zero-Rated Supplies, Nil Rated Supplies and Non-GST supplies are as follows:
GST Refund for Zero Rated Supply
Although, the exported supplies are accounted as zero-rated supplies, the goods and services used by the supplier may not be exempted from any tax. Thus, the supplier shall be eligible to claim input tax credit in respect of such goods or services used for the supplies
Under GST, an exporter claiming a refund on account of ‘zero-rated’ supplies can choose between the following 2 options
Refund procedures for Export of goods
Under GST, the refund procedure for Zero-Rated Supplies does not require a filing of any refund application (GST RFD-01) separately. The registered supplier can use the shipping bill as a refund claim in itself.
As per the GST law, the shipping bill under consideration as a refund claim is required to fulfil the following two conditions:
Once the above two conditions are met, the refund process can be initiated by the department.
Refund procedures for Export of Services and Supplies to SEZ
The exporter can pay IGST and claim the refund under GST. In this case, the refund claim has to be filed in Form GST RFD-01. While filing for his/her refund claim, the exporter is also required to file the followings:
In case of SEZ supply, the exporter is required to file the following along with the refund claim:
The exporters and suppliers of SEZ are entitled to a 90% refund on a provisional basis. The applicant shall be granted his/her provisional refund within 7 days of the refund claim and the same shall be credited directly to the applicant’s bank account. However, the exporter cannot avail his/her provisional refund if he/she has been prosecuted for any offence under the GST law or earlier law in the last 5 years.
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