Zero-rated and exempt supplies both mean no GST/HST is charged, but they affect input tax credits differently. Here’s the distinction.
A zero-rated supply is taxable at 0% GST/HST. No tax is collected, but a registrant may generally claim input tax credits on eligible purchases used to make the supply.
An exempt supply is not subject to GST/HST. A registrant does not charge GST/HST and generally cannot claim input tax credits for purchases used to make exempt supplies.