GST Registration for Zero Rated Services
The majority of the time we can see that a country and its government promote exports to a greater extent. This is done for the enhancement of the economy and its growth, increasing employment opportunities, and also balancing the payments. As a part of this process to boost the exports, the Government comes up with certain reliefs and benefits for the business entities engaged in the export process. Zero Rated Supply in GST can be understood as a part of benefits given by GST Authority to these business entities.
So, what is Zero Rated Supply?
As per section 16 of the GST Act, a zero-rated supply would mean any of the below-given supply of goods or services:
– Export of goods or services or both by business entities
– Supply of goods or services or both by business entities Special Economic Zone (SEZ) Developer
– Supply of goods or services or both to a which has been done by supplier to Special Economic Zone (SEZ) Unit.
The Zero-Rated supply would allow the business entities to avail the input tax credit (ITC) of the GST paid by them on any purchase for making possible the supply of zero-rated goods or services or both. But for availing this the business entity supplying the zero-rated supplies should be registered under the GST Act. And this would make them eligible to claim a refund of the GST paid on the purchase as the ITC shall be made available.
For availing of the registration, the applicability of GST shall be tested as the aggregate turnover should be computed and the applicability of the threshold exemption shall be checked. It shall be noted that as export is considered as inter-state supply availing of GST registration becomes mandatory for the exporter.
And in case of supply made to SEZ Developer or SEZ Unit the same shall be considered as zero-rated supply, but the credit of input tax shall be made available and for availing this the business entity should obtain registration under GST. The business entity while computing the total turnover shall add the zero-rated supplies along with the taxable turnover and shall also take registration for availing of the ITC.
And a provisional refund of the claim of ITC made by supplier engaged in the supply of zero rate goods or services or both shall be made up to 90% as per section 54(6) of the CGST Act. Now the remaining 10% of the refund shall be made after due verification of the documents that were furnished by the supplier.
Thus, we can now conclude that the zero-rated supply shall be made by a supplier without collection of tax as there is no tax applicable on the same. But the supplier shall claim a refund of the ITC available to them based on payment of tax made on purchase. And for this, the supplier shall take registration under GST Act and also file GSTR 3B and 1 furnishing all the details of the supplies made by them in the form of export, and also to the SEZ developer and SEZ unit.