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Difference between 0 tax and exempted

hemasundar (accountant) (28 Points)

25 August 2021

unable remember the 0% tax and exempted tax

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2 Replies

prasad Nilugal (3914 Points)
Replied 25 August 2021

Zero rated tax means , All Export and supply to SEZ Units are Zero rated supply and Exempt supply means Exemption by of notification by the GOVT on certain Goods and services in public interest .

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Mayank Jha (2 Points)
Replied 25 August 2021

The most significant difference between the two is that Zero rated tax gives the benefit to claim Input Tax Credit, whereas Exempted tax doesn't allow one to take ITC for the inputs of exempted goods as it will lead to negative taxation. Apart from that, the definition is well covered by Prasad Nilugal sir.