What are zero rated supplies? If they are already Zero Rated, why we won't call them exempt?

Question

Accepted Answer

Zero rated supplies are goods or services that are subject to a 0% value-added tax (VAT) rate.

Zero rated supplies are still subject to VAT, but at a 0% rate.
Unlike exempt supplies, zero rated supplies are eligible for VAT input tax recovery.
Examples of zero rated supplies include basic food items, prescription drugs, and exports of goods and services.

Accepted Answer

Supplies covered under Sec 16 of IGST Act viz. Export and Supplies made to SEZ Units Nd Developers are Zero Rated Supplies. Zero Rated Supplies are transactions where net effect of tax on the transaction is zero meaning net cash flow for tax will be zero. This makes zero rated a transaction classification irrespective of taxability of each item. Hence, we may have a case where transaction is zero rated supplies with items being taxable and / or exempt. Moreover, the both terms i.e. Exempt Supplies and Zero Rated Supplies are explicitly defined.

What are zero rated supplies? If they are already Zero Rated, why we won't call them exempt?

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