What is the difference between zero rated and exempt supplies

VAT is the value added tax that is charged when selling goods and services. The price of these goods and services include the VAT amount. There are different types of VAT rates that apply to different types of goods and services. There are also certain goods and services on which a VAT cannot be charged. Retailers of goods and services need to know which tax rates apply for different goods and services so that the right amount of tax can be charged and reclaimed.

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VAT is not charged on these supplies, it is important to know the real difference between these supplies. This is also important from a reporting perspective, because in VAT returns, a clear bifurcation of the value of each of these supplies is required to be furnished. Exempt supplies are specific supplies which have been declared as exempt.

On these supplies, VAT should not be charged. These are considered as taxable supplies. Hence, input tax can be recovered on supplies used to make zero rate supplies. Subscribe to our weekly newsletter and get updates in your email. No spam, Only relevant mails.

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