What are 'zero rated' goods and services?

What is the difference between 'zero rated' and 'tax exempt' good or service. Zero-rated and exempt refers to the preferential status the government gives some essential goods and services, which means their sale is not taxed.

The main difference between the two is that companies that supply zero rated goods or services, they can still reclaim all their input VAT. Exempt companies are usually simply not registered.