Glossary
What is a nil-rated supply?
A supply listed at 0 percent in the GST rate schedule. It looks like a zero-rated sale on the invoice, but it behaves like an exempt one.
Updated
In short
A nil-rated supply is one listed at a GST rate of 0 percent, with no tax and no input tax credit. SimpleERP seeds a GST 0% rate for nil-rated products.
A nil-rated supply is a supply of goods or services that carries a GST rate of 0 percent in the rate schedule. No tax is charged, and it is treated as an exempt supply, so input tax credit on the purchases used for it is not allowed. It differs from a zero-rated supply such as an export, where the credit is kept. Nil-rated sales are reported in GSTR-1 table 8.
Nil-rated supply: a worked example
Suppose Lakshmi Steel Furnitures sold a nil-rated item alongside its furniture. One invoice to Annai Enterprises, illustrative:
| Line | Taxable value | Rate | GST |
|---|---|---|---|
| Steel rack 4 shelf × 2 | ₹9,980 | 18% | ₹1,796.40 |
| Nil-rated item × 10 | ₹2,000 | 0% | ₹0 |
| Total | ₹11,980 | ₹1,796.40 |
FAQ
Questions, answered
Is nil-rated the same as exempt?
In effect, yes. Both carry no tax and both deny input tax credit on the inputs used. The difference is where the 0 percent comes from: a nil rate is in the rate schedule, while an exemption comes from a separate notification. GSTR-1 table 8 asks for them in separate columns.
Is nil-rated the same as zero-rated?
Nil-rated and zero-rated are not the same. Zero-rated means exports and SEZ supplies, where the supplier keeps and can be refunded the input tax credit. Nil-rated supplies lose the credit. Both show no tax on the invoice, which is why they are easily confused.
Did GST 2.0 change which items are nil-rated?
The rate rationalisation from 22 September 2025 moved many items between slabs and widened the exempt list, as notified. Check each product's HSN against the current CBIC rate notifications before you set its rate.
Do I need a GSTIN if I sell only nil-rated goods?
A person supplying only goods that are nil-rated or wholly exempt is not liable to register, as notified. If you also sell taxable goods and your aggregate turnover crosses the threshold, the nil-rated sales count towards it.
Related
Keep reading
Exempt supply
A supply that attracts a nil rate, is wholly exempt by notification, or is outside GST, with no input tax credit.
Read moreZero-rated supply
Exports of goods or services and supplies to SEZ units or developers, which carry no tax but keep input tax credit.
Read moreHSN code
The number that classifies goods for GST and customs, and so decides their GST rate.
Read more
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