ZR full form stands for Zero Rated. Zero Rated is a term used in the taxation system to describe goods or services that are exempt from Value Added Tax (VAT) or Goods and Services Tax (GST). In simple terms, it means that these goods or services are not subject to any tax.
Zero Rated supplies are different from exempt supplies. Exempt supplies are goods or services that are not taxable, meaning that no VAT or GST is charged on them. On the other hand, zero-rated supplies are taxable supplies, but the tax rate is set at zero percent. This means that although the goods or services are subject to tax, no tax is actually charged.
The purpose of zero rating certain goods or services is to make them more affordable and accessible to consumers. It is often used for essential items such as food, medicine, and educational services. Zero rating these items helps to reduce the burden of tax on individuals and ensures that these basic necessities are more affordable for everyone.
Zero rating can also apply to exports and international transactions. When goods or services are zero-rated for export, it means that no tax is charged on them when they are sold to customers in other countries. This helps to make exports more competitive and encourages international trade.
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