Exempt, nil-rated and zero-rated, the difference

These sound similar but are treated differently, mainly for input tax credit (ITC).

Nil-rated and exempt

Nil-rated supplies attract a 0% rate; exempt supplies are notified as exempt. In both, you charge no GST and generally cannot claim ITC on related inputs.

Zero-rated

Zero-rated covers exports and supplies to SEZ. You charge no GST but you can still claim and refund the input credit, which is why exporters use a LUT. That credit difference is the whole point.