Zero-rated goods in GST are specific goods and services taxable at a 0% rate, meaning no tax is charged to the final consumer while suppliers can claim input tax credits (ITC) on related business expenses. Primarily covering exports and supplies to Special Economic Zones (SEZs), this designation ensures no tax burden is passed on, making products competitive internationally.
Zero rated supplies in GST are those exports or supplies to SEZ that do not attract any GST. They are beneficial for the economy as they boost exports and generate foreign exchange.
Zero-rated supplies are supplies that are not subject to GST in certain situations. A rate of 0% applies to these supplies. For example, a New Zealand architect designs a building to be constructed on an overseas property for an overseas client.
Items designated as zero-rated can vary by country but typically include essential goods such as basic foodstuffs, prescription medications, and water services. Zero-rated goods are critical in international trade as they are not subject to VAT in cross-border transactions, lowering costs for importing and exporting.
The GST/HST break includes certain qualifying goods, such as:
By zero rating it is meant that the entire value chain of the supply is exempt from tax. This means that in case of zero rating, not only is the output exempt from payment of tax, there is no bar on taking/availing credit of taxes paid on the input side for making/providing the output supply.
Currently, there are 21 food items in the zero-rated basket: brown bread, maize meal, rice, maize meal, vegetables, samp, fruit, mealie rice, vegetable oil, dried mealies, milk, dried beans, cultured milk, lentils, brown wheaten meal, pilchards/sardines in tins, eggs, milk powder, edible legumes, dairy powder blend and ...
This means that the customer does not have to pay any VAT as it is charged at a rate of 0%, but because the supply is taxable, the supplier can reclaim VAT paid on the costs of making that supply. Examples of zero-rated goods and services include most food items and children's clothing.
The taxation of exempt goods and services are similar to zero-rated goods and service in that they are not taxed. The difference between the two is that input tax credits are not allowed for expenditures incurred to make or provide the goods and/or services.
Zero-rated supplies refer to the export of goods and the provision of international services as listed in section 21(3) of GST Act. GST is chargeable on these supplies at 0%. Please ensure that you have maintained the required documents to support your zero-rating.
For goods imported into Australia under A$1,000, GST (Goods and Services Tax) is generally charged at the point of sale by the overseas seller or online marketplace, not at the border, under Australia's Low Value Imported Goods (LVIG) rules https://sellercentral.amazon.com/help/hub/reference/external/G4BBHW7XBNS2GMWU,. This 10% GST applies to most retail sales to Australian consumers, with exceptions for certain items like alcohol or tobacco, which always attract duties/taxes regardless of value, and business purchases.
Examples and Reporting in GST Returns
Common examples of nil rated supplies include essential commodities like grains, salt, and jaggery. When reporting nil rated supplies in GST returns, businesses must include them in their GSTR-1 under the appropriate section but without any tax liability.
Common Examples of Zero-rated GST Transactions:
International services – Services provided to overseas customers. Business sales as a going concern – When you sell your entire business. Land transactions between GST-registered entities – Subject to specific conditions.
Fresh fruits, fresh milk, curd, bread, etc. Exports and supplies made to SEZ units or SEZ developers, of both goods and services. Grains, salt, jaggery, etc. Alcohol used for human consumption, natural gas, petrol and its products, etc.
Merchant exporters can obtain goods from a manufacturer at a concessional GST rate of 0.1% for export. Deemed Exporter: This refers to a person who supplies goods that do not leave India but are notified as deemed exports under section 147 of the CGST Act.
Common examples of zero-rated sales include basic groceries, prescription drugs, and certain medical devices. Understanding zero-rated sales is essential for both consumers and businesses, as it affects pricing and tax obligations.
Costs that are zero-rated for VAT do have VAT on them, but at 0%. Examples include: books and newspapers. most travel costs, such as train or air fares.
Local purchases of goods, properties, and services by duly registered Renewable Energy (RE) Developers, directly and exclusively used for the development, construction, and operation of renewable energy facilities, are subject to VAT zero-rating.
All unprocessed foods for human consumption, including raw meat and fish, fruit and vegetables, cereals, nuts, pulses and culinary herbs are zero rated.
The South African Poultry Association (SAPA) has submitted a formal request to National Treasury to remove the 15% value-added tax (VAT) from chicken, proposing that chicken be added to the list of zero-rated basic foodstuffs in the 2026 National Budget.
Some examples include bread, fresh fruits, milk, curd, etc. Supplies made overseas and to Special Economic Zones (SEZs) or SEZ Developers come under the zero-rated supplies. This supply attracts a GST of 0%.
Types of GST in India
CGST (Central Goods and Services Tax) SGST (State Goods and Services. IGST (Integrated Goods and Services Tax) UTGST (Union Territory Goods and Services Tax)
📝 Overview of Schedule – Nil Rated (0% GST)
These typically consist of essential commodities like fresh fruits, vegetables, grains, salt, and educational materials. By assigning a zero tax rate, the government ensures these basic items remain affordable for all, supporting low-income groups and public welfare.