Zinc is more reactive than iron. So when it is added to iron sulphate solution it displaces iron. The reaction involved is:
\(\text{Zn (s)} + \text{FeSO}_{4}\text{(aq)} \rightarrow \text{ZnSO}_{4}\text{(aq)} + \text{Fe(s)} + \text{Heat}\)
The colour of solution changes from green to colourless due to the formation of zinc sulphate. The reaction is exothermic in nature.