The difference between the three terms can be drawn in the following manner:
1. Nil Rated Supply - Nil rated supply is the supply which is chargeable to nil rate of tax or 0% of tax. So goods or service which are said to be covered under nil rated supply are the ones which are chargeable to 0% GST.
2. Zero Rated Supply - There is a common understanding that supplies liable to 0% tax rate are the zero rated supplies which is wrong. In GST, Zero rated supplies are the ones which are executed under Section 16 of the IGST Act. It includes :
- Export of goods or services or both
- Supply of goods or services or both to a SEZ developer or SEZ Unit
3. Exempt Supplies - Exempt supplies are the supplies which are wholly exempt from tax under GST Act. Exempt supplies also include Nil rated supplies.