So, today’s article is about how supply to Special Economic Zone (SEZ) takes place and what is the coverage of SEZ under the GST regime. GST, with the hope of billions to provide a better way to transact in a business and to eliminate the cascading effects under the previous tax system, is the biggest tax reform in India ever.
Although the system is very new to all and the taxpayers are not well-versed with the new indirect tax nomenclatures, we can expect that by the time it will go flawlessly. But, understanding the basics in detail about every aspect of GST is also important.
Latest Updates
- 53rd GST Council Meeting: Starting from the 1st of July 2017, Compensation Cess on imports to Special Economic Zones (SEZ) for certified procedures carried out by the units of SEZ units and developers.
GSTN New Functionality to Provide Filing Feature of LUT
Any enrolled individual claiming the option to provide the goods and services for export or SEZs excluding any payment of the integrated tax needs to file before exporting the supply a Letter of Undertaking (LUT) if the person does not litigate for tax theft on the number of Rs 2.5 cr or more beneath the CGST act or IGST act or the in the previous law.
Taxation Principle of WTO to SEZ
World Trade Organization has standardized some principles to make a supply with Special Economic Zones across the world. Under the sanctioned rules, exports to such SEZ areas are exempted from VAT/GST and conversely, the imports from such areas are taxed at the same rate as the local production within the country.
So, considering a zero-rated tax on exports is a principle of WTO which is related to destination-based taxation rules and the VAT-free items here are described as zero-rated where the manufacturer can recover the costs and overheads used to get resources. As GST also depends on a destination principle of WTO, the exports made within the country go outside of it are termed as zero-rated and the cost and overheads spent on resources are refunded in the name of input tax to manufacturers back.
The OECD guidelines for multinational enterprises on the neutrality of VAT are responsible for consistent business conduct with applicable laws.
Goods Export to SEZ
Under the GST Regime, the above-mentioned guidelines remain the same destination-based taxation persists as zero-rated and a described benefit stays for the exports to Special Economic Zones (SEZs). The extension for the stated benefit is up to processing zones of the SEZs, but the supplies from these SEZ Areas to the Domestic Tariff Area (DTA) are liable to be described as a taxable trade under the scope of GST rules and regulations.
Free VAT Laws Described Under Section 16 of IGST ACT
- Zero-rated supplies are mentioned below regarding the goods and services or both, viz:
- a. Export of Goods/Services or both to SEZ developer or unit
- b. Supply of Goods/Services or both to SEZ developer or unit
- According to the provisions of sub-section (5) of section 17 of the CGST Act, the credit of input tax can be claimed for such zero-rated supplies, despite the supply perhaps being an exempt supply
- A registered person under the GST regime can claim the refunds in either case:
- a. A taxpayer can supply the goods or services or both, under a bond or a letter of undertaking, fulfilling the conditions and procedure as mentioned in the above provisions, without paying IGST and can claim the refunds of unused input tax credit
- b. A taxpayer can supply the goods or services or both, fulfilling the conditions and procedure as mentioned in the above provisions, with the payment of IGST and can claim the tax paid on the supply of the Goods or Services or both, according to the rules described under CGST Act.
From the reference a definition defined under the Special Economic Act, 2005 for Special Economic Zones and SEZ Developers, and also covered under Sections 19 and 20 of the Integrated Goods and Services Act(IGST), 2005. Some other special provisions are also described under the IGST Act, 2005 about procurement of Goods and Services on which taxes are not paid. GST law provides refunds for taxes paid by the supplier for supplies made to a SEZ developer or SEZ unit-holder.
By Section 7(5), (b) of the IGST Act, the supplies of Goods or Services or both to or by a developer or Unit Holder of SEZ will be termed as the supplies within the state and IGST would be chargeable with further refund mechanism. For example, a taxpayer living in Bhuj supplies to Kandla SEZ in Gujarat, this supply must be termed as interstate supply and IGST will be charged, despite the refund scheme is also eligible for the same procedure because the supply comes under a zero-rated supply.
The laws are quite clear that supplies made about a bond or a letter of undertaking to SEZ areas will be taxed free and other supplies to this area will attract the IGST, which will be claimed further for refunds.
As per section 54 of the CGST Act, the three options are mentioned to supply to SEZ:
The Supplies Made With The Payment Of IGST
According to CGST laws, the supplies made with the payment of IGST to an SEZ Developer or SEZ Unitholder are liable for the payment of IGST at applicable rates. The export invoice will be generated in Indian currency with a proclamation that ‘SUPPLY MEANT FOR SEZ DEVELOPER/UNIT WITH PAYMENT OF INTEGRATED TAX’. The declaration made with the mentioned option will make the refund procedure fast. The IGST mentioned in the invoice is not charged from the customer, it is just for the acknowledgement purposes.
The procedure will go like this:
- For example, An entity X Pvt. Ltd. supplies the Goods (whose purchase price is Rs. 2 lakh) for Rs. 3 lakh to an entity Y Pvt. Ltd located in Kandla SEZ. The applicable IGST will be charged at 18%. The invoice will look like this:
- The selling price of the supply: Rs. 3 lakh
- Applicable IGST at 18%: Rs. 54,000
- The invoice will consist total value: of Rs.3.54 lakh
Now, entity X Pvt. Ltd. will release the tax liability of Rs. 54,000 by using an Input Credit of Rs. 36,000 which is available on an account and cash payment of the remaining Rs. 18,000. So, entity X will get a refund of Rs. 54,000, and subtracting Rs. 18,000 from the whole, a refund will be Rs. 36,000 which is the real net worth of input tax credit.
| 1. For Purchase
Purchase A/cDr.200000 SGST Credit A/c Dr.18000 CGST Credit A/c Dr.18000 To Party A/c 236000 | 2. For Sale to SEZ
Y Ltd. A/c Dr.300000 IGST Refund Receivable A/c Dr. 54000 To Sales 300000 To IGST Liability A/c 54000 |
| 3. For Payment of IGST
IGST Liability A/c Dr.54000 To SGST Credit A/c 18000 To CGST Credit A/c 18000 To Bank A/c 18000 | 4. On Receipt of Refund
Bank A/c Dr.54000 To IGST Refund Receivable A/c 54000 |
The Supplies Made Under A Bond
The concept of a Bond is derived from Excise Laws and it is very new for traders covered previously under VAT Laws or Services Laws. As per the Laws, there will not be any such payment of tax liability for the supply made to SEZ and the declaration will be clearer in the invoice such as ‘SUPPLY MEANT FOR SEZ/SEZ DEVELOPER UNDER BOND WITHOUT PAYMENT OF INTEGRATED TAX’.
The option is very relevant as the supplier will be able to use the Input Tax Credit for any other domestic supply. The option gives relief to the suppliers as they make a supply containing a Bond and are not required to pay IGST and claim the refund. An indemnity bond in the format of GST RFD-11 on non-judicial stamp paper will work between the supplier of SEZ and the Government about the president of India.
A supplier is not required to furnish such a Bond(named Running Bond) for each supply made to SEZ, hereinbefore the bond will be valid for 12 months.
A Bond will be carried along with a Bank Guarantee as a security and a Jurisdictional officer will be responsible for the amount to be kept as bank security concerning the track record of the supplier. The Bank guarantee amount does not exceed 15% of the Bond amount, in any case.
The Bond will be acceptable by the Assistant Commissioner or Judicial Deputy and this will make the easy flow and more compliance regarding the supply. A Bank guarantee becomes feasible to recover the damage to revenue in case of breach or failure of the B.G. The form GST RFD-11 will be furnished by the Jurisdictional Officer or Assistant Commissioner manually.
What is Zero Rated Supply turnover?
- Zero-rated supply turnover is the value of total supplies made on account of exports out of India including SEZ units for the month or the period for which the refund has been sought. This is the value of supplies in the tax period mentioned in the GSTR 3B form including all the supplies made out of India including SEZ.
The Supplies Made Under A Letter Of Undertaking
Due to the hurdles faced by a supplier under option 2, he needs an issuance of a Bank Guarantee with a fixed amount and commission. It blocks the fixed deposit with the bank. To resolve such problems, there is another option which allows a supplier to give a letter of undertaking for the purpose of supplies to SEZ.
An LUT is also acceptable by the Assistant Commissioner or Judicial Deputy. The validity period for such a LUT will be 12 months and it can be duplicated for each year. In case of any breach of the LUT, there can be a need to furnish B.G., or else a supplier can carry LUT for hurdle-less supplies.
Read Also: How to File GST Refund Claims Manually? Step-by-Step Guide
By notification No.16/2017 of Central Tax, the conditions are specified for an intended person to release LUT. In the following condition, LUT can be furnished in place of a Bond:
- As per paragraph 5 of the Foreign Trade Policy 2015-2020, a prescribed status holder can avail of a LUT
- The taxpayer who has got foreign inward remittances which is at least 10% of the export turnover (which is not less than Rs. 1 Crore) in the previous financial year, and the person should not be prosecuted as per CGST Act, 2017(12 of 2017) or any laws claiming tax evasion of Rs. 2.5 Crore.
The exporters and suppliers who make supplies to SEZ, apart from the mentioned notification are only liable to issue a Bond, not a LUT.
we are the registered regular taxpayer we are supplying goods without tax to unregistered person in sez area so where should i show these sales in gstr1 please reply
You should show the same under Nil rated/exempt supply transaction, but please consult the same with GST practitioner before proceeding
I am registered as a training firm ,having a valid LUT .The trainer (supplier) is adding GST to his invoice to me .Though my billing to client (SEZ) will not have GST component. Can the same LOA be used by my supplier also to remove GST from his billing to me.
In the recent GST audit, officers asking all the invoices raised on SEZ units duly attested by Customs officers. (available on the premises). Is it mandatory? Most of the supplies are software licenses and we submit digitally signed invoices
“Please consult GST practitioner for the same”
We have purchased goods by paying GST, and supplied those goods to SEZ under LUT with out paying IGST. Are we eligible to claim ITC on our purchases?
No
Sir
We are provided labour charges in SEZ Unit for machine commissioning and we have made labour invoice without tax against LUT for SEZ Unit.
Can we collect DTA form from SEZ Unit.
“Please consult the same with GST Practitioner”
Respected Mam/Sir, kindly clarify if any provisions under GST exists with respect to opting out of SEZ and becoming the DTA.
If not, is the GST Registration needs to be amended after the opting out of SEZ
“Please consult GST practitioner for the same”
Dear Sir,
Can we issue in October 2021, a Commercial Credit note for 2020-21 SEZ without payment of IGST invoice? Is there any issue with not reporting such commercial credit note in GST returns? Kindly advise.
Yes you can issue the same, portal does not raise any issue regarding this
Dear Sir, TCS would be applicable for the sale of MET COKE. Please advice.
Please contact to GST practitioner
In the recent GST audit, officers asking all the invoices raised on SEZ units duly attested by Customs officers. (available on the premises). Is it mandatory? Most of the supplies are software licenses and we submit digitally signed invoices
MATERIAL VALUE IN CASE 1 TO 100 RS, WE WILL GENERATE DTA PROCUREMENT FORM. ON WHICH NOTIFICATION
Please contact to GST practitioner for such issue
I have supplied good to SEZ in fy 2019-20 without GST and LUT was also not filed Now can I pay the IGST on Sept 20 GST3B and claim a refund?
No
Hello Team,
As per my experience, we have 2 declarations for SEZ
1) On payment of IGST
2) Without payment of IGST
These declarations are applicable for creditable material/Services.
How about SEZ declaration if we are supplying non-creditable material/Services to the SEZ zone?
one of our supplier asking to mentioned
“ON PAYMENT OF INTEGRATED TAX-The supplier will not claim a refund of IGST charged in invoice”
Didn’t understand how does it work?
What makes it important?
Please contact to GST Practitioner
Dear Sir
We are supplying goods to different parties in SEZ. Whereas we are charging IGST for some parties and for other we are supplying under Bond.
Can we do both options in a particular month?
If you are supplying the goods under bond then you can not claim any ITC
Whether GST paid on purchase invoices when we are supplying goods under bond to SEZ units is not permissible for ITC.
Yes
Yes, there are no restrictions as such on aforementioned.
Yes, no restrictions on above as such.
Hi
We are a unit operating in SEZ. Our suppliers charge us IGST. Are we supposed to pay GST?? What are the documents we should provide the suppliers for not making GST payment?
Is GST exempted for the Vehicle’ Insurance premium owned by a Company in SEZ?
“Please contact to GST practitioner”
Sir,
Is GST applicable on Rent paid by IT/ITES Company in SEZ? If yes then what %.
“When you rent out a residential property for residential purposes, it is exempt from GST. Any other type of lease or renting out of the immovable property for business would attract GST at 18%, as it would be treated as a supply of service.”
Sir, We are supplying some Goods & Services to SEZ. We both are located in Bangalore and they are asking to omit the GST part considering the LUT. We are doing it for the 1st time, Kindly let us know detailed procedure what and we should follow in making this transaction.
If we omit the GST how we should consider it while filing the GST returns. Should we have to include this bill? And how the return from supplier is going to play role?
First, you have to apply for LUT on GST portal after that you can do the transaction without payment of tax for detailed process go to this link https://tutorial.gst.gov.in/userguide/refund/index.htm#t=Furnishing_of_Letter_of_Undertaking.htm
The transaction should be done though without payment of tax.
Res.Sir, we have been with 100% Export Oriented Unit, Reference to recently amended clause exempt BCD and pay IGST during Import then we can OPt for Export with payment of IGST. My query is IS there any glitches if we have recent Import machinery of 4 Crore as on 20/03/2020 without payment of BCD and IGST which will get installed during April-2020/May-2020. As we want to opt for Export with payment of IGST from April/May-2020. It’s confirmed on further imports we will pay IGST
Kindly contact senior practicing Chartered Accountant
Dear Sir
Pls guide me
SEZ Unit Sales material TO 100% EOU unit IGST exempted or not
which circular or notification
regd
Under the GST law, IGST or CGST plus SGST will be payable by the suppliers who make supplies to the EOU. The EOU will be eligible to take Input Tax Credit of the said GST paid by its suppliers.
Dear Sir,
SEZ unit sales to 100% EOU units,
As per Custome notification 52/2003 Custome duty and IGST Foregone,
what is GST Law, IGST Exempted or not,
IGST not Exempted Who will pay Liability ( Tell Notification no )
imported goods could be temporarily cleared without payment of all Customs duties, IGST, and Compensation Cess not paid at the time of their import. However, the applicability of GST on the supply of such goods shall be independently governed by GST laws.
Sir,
I am a construction contractor in SEZ. All Raw/Capital Goods purchased by me. So DTA supplier raises my full rate of GST. How I can refund through Developer or on the RA bill (under Services).
Please contact GST Practitioner
We are Landscape Contractors. Recently we have completed SEZ project with supply and installation items with zero tax. But, we have paid to tax to our supplier, who has to supply materials like Granite etc., to complete the SEZ project. Now, we need your guidance on how to claim input tax benefit for the supplies received on account of SEZ project.
Dear Sir, since you have provided sales with Zero rates, the question of asking for input tax benefit does not arise, however, you can claim the amount as a refund if applicable. For more detail kindly contact to GST practitioner
Hello.
Our unit is situated in SEZ and we have got one PO from customer in France. as per PO certain item is to be provided by customer at zero cost. These items are being purchased by our customer from India only (from DTA unit).
Now, our customer wants these items to be delivered by his supplier (INDIAN DTA unit) to us directly instead of going to France and coming back. whereas payment will be done by our customer to Indian supplier.
Please suggest can we (as SEZ unit) import these items directly from DTA supplier on behalf of our customer as there will be no commercial transaction between us and that DTA supplier. And is this transaction comply with SEZ rules and regulations.
Regards,
Ankur
Sir, I am a registered dealer in Delhi and I have received an order from a dealer which is also registered in Delhi. As per their instruction goods to be supplied to a dealer situated at SEZ in Uttar Pradesh.
Now, kindly advise whether do I need to charge IGST? or can supply the goods on LUT?.
Regards
As both the dealers i.e. vendor and purchaser are registered and transaction involved the movement of goods thus the place of supply would be assumed as on the purchaser’s address i.e. CGST and SGST would be leviable.
Sir, We are supplying food at canteens in SEZ. We prepare food there in canteens. We charge them as per the contract for the supply of food to employees. Shall we charge IGST or can we submit LUT and consider it as zero-rated.
Your prompt reply would be highly appreciable.
Both of the options are available with you i.e either you can charge IGST or can submit LUT.
Dear Sir,
We are a sez unit. we receive services from DTA and vendor has charged CGST and SGST. Please advise whether we can avail input tax credit.
please advise if we request the vendor to modify the invoice and incorporate IGST, whether we will be able to claim ITC on that.
We are providing services to DTA, and we have to pay GST on the income generated from them because they are located in India, Whether the INPUT TAX CREDIT will be available against the same.
Supply to SEZ is considered a zero-rated supply. The supplier can either charge IGST and SEZ can claim the refund of the same. Or no IGST is charged in case bond/LUT furnished.
Supply from SEZ to DTA is considered as exports i.e. exempt in the hands of SEZ. The recipient DTA pays applicable import duties on it.
Currently i.e. FY 18-19 we are supplying Material to SEZ in Kandala Gujarat, we have filed LUT for the same in July-18, now we want to supply material to another Customer who is also located in SEZ MP so for that whether we need to file separate LUT in one FY 18-19?
A DTA unit sells goods to a foreign buyer and as per instructions of the foreign buyer for the fulfilment of his project requirement in India by an SEZ unit and instructs the suppliers to deliver the goods to the SEZ unit in India for logistics convenience and saving of time.
1. Whether such an arrangement is possible.
2. Whether the SEZ unit can file a bill of entry and bring the goods into the SEZ.
3. What is the procedure to be followed?
Dear Sir
we have regular GSTIN as the regular dealer. Now we take registration as co-developer in another SEZ developer and have BLUT also. can we use same GSTIN or take another as SEZ co-developer for tax exemptions and is the process
Thanks, & Regards
If the SEZ is in the same state, separate registration may not be required but if you want different registration for different segments then you can take separate registration.
We are a company located in the SEZ unit. We have not taken GST registration. Is it mandatory? We are paying Rent to SEZ developer every month. The Tax invoice states supply meant for export on payment of IGST. IGST is exempt in Tax Invoice. The developer says to take GST registration. Is it required kindly help?
If the aggregate turnover in a financial year does not exceed Rs. 20 lakhs, then GST registration is not mandatory. there is no need for registration even the same is not there.
I supply to SEZ. I have filed my LUT also. Can I supply to a company in SEZ without charging any IGST?
Yes, you can supply.
Sir,
We are an SEZ supplying to another SEZ unit. How to treat these supplies? Interstate or Export? What options do we have (with and without payment of taxes?). In which Table of GSTR1 should we report such supplies. Please help.
We are clear w.r.t supplies to DTA, as these will be reported only by DTA.
SEZ UNIT PURCHASED MATERIAL FROM DTA (DOMESTIC TARIFF AREA) FOR EXPORTING PURPOSE. THAT CASE SOME TRADER HAVE TO CHARGED IGST AND SEZ UNIT PAID THE IGST TO SUPPLIERS.
IN THIS CASE SEZ UNIT CAN CLAIM ITC PAID BY SEZ UNIT.
There are two options available with a dealer to claim refunds:
I. The dealer can export under Bond or LUT (Letter of Undertaking) and claim a refund of the accumulated Input credit of tax; or
II. The dealer can pay IGST by adjusting ITC while making the supplies and claim refund of the same.
Yes, SEZ unit can claim ITC charged by the supplier.
SEZ UNIT PURCHASED MATERIAL FROM DTA (DOMESTIC TARIFF AREA) FOR EXPORTING PURPOSE. THAT CASE SOME TRADER HAVE TO CHARGED IGST AND SEZ UNIT PAID THE IGST TO SUPPLIERS.
IN THIS CASE SEZ UNIT CAN CLAIM ITC PAID BY SEZ UNIT
I am registered dealer in Gujarat supplying goods to SEZ in Gujarat, on behalf of the third party, “Bill to ship” Transaction. The third party is also registered in Gujarat. Now, do I need to charge IGST? or CGST & SGST on such bills.
Further, Do I need to Mention on Bill “SUPPLY MEANT FOR SEZ UNIT” in place TAX Invoice?
In case of SEZ, it is treated as zero-rated supply and only IGST need to be paid on such supplies as they are always interstate. Yes, it needs to be mentioned on the bill.
We gt P.O.from SEZ unit. We have LUT issued to us. Can we make normal invoice to party without charging any kind GST. What documents we require from SEZ unit which are supposed to be submitted while filing GST return?
Yes, normal invoice needs to be made in this case. No documents required to be submitted while filing the return.
Hi:
We have given our land for JD to the builder. this is an IT SEZ. how can we the landowners avail of sez tax benefits… can we become transferee developer for service and maintenance of our share of the built-up space? we don’t want to form the co-op and become co-developer.
please advise.
Thank you.
Please refer to practicing CA in this regard
SEZ UNIT PURCHASED MATERIAL FROM DTA (DOMESTIC TARIFF AREA) FOR EXPORTING PURPOSE. THAT CASE SOME TRADER HAVE TO CHARGED IGST AND SEZ UNIT PAID THE IGST TO SUPPLIERS.
IN THIS CASE SEZ UNIT CAN CLAIM ITC PAID BY SEZ UNIT.
whether IGST payable on goods return from SEZ units even if having LUT?
My company is located in SEZ and want to know that there is any liability/responsibility of the company if the vendor has no LUT or not mentioned LUT no. on an invoice and supplied material to SEZ unit.
In the above case, what is the responsibility of the company?
We are in SEZ. if supplier raising invoice without IGST before applying LUT Shall we accept it?. Liability goes to supplier or receiver. Please explain.
It is the liability of supplier to charge IGST if the receiver does not present LUT to him, the supplier should pay IGST.
Whether TDS is to be deducted by SEZ Unit
Can composition scheme dealer supply goods to SEZ unit?
No. SEZ supplies are considered as inter-state supplies and composition dealers cannot make inter-state supplies.
My company want to sale capital goods, which will be imported from China to our client in SEZ Kandala. And goods will be directly supplied from China to that SEZ. And also ship will be provided by our SEZ client. Our duty will be only to procure goods from China and load on the ship of our SEZ client, that’s it. After customs clearance from China and before the customs clearance in India we will transfer the title of goods to our SEZ client and he will clear the goods at customs. (But we already had made the contract with our SEZ client to sell the goods.)
So, I am confused about this transaction that is this type of transaction can be done? As this cannot be High Sea Sale, as we have already made the contract to sale. So provide me with the guidance about this transaction and also about the customs duty and IGST liabilities and all. And also one more thing that Can we transact with our SEZ Client in US Dollar? (i.e. can bill from our side be raised in USD?) Thanks in Advance.
We supplied goods in SEZ locally without payment of CGST and SGST against LUT. I purchase the material for this supply and paid with CGST and SGST so I claim credit for this? and any procedure for that? and any application for the refund?
I am supplying to an SEZ unit which is in SEEPZ Andheri since last year when GST came into effect since then I haven’t charged any tax in any bill as they’re in SEZ unit but how I can get the refund of GST which I have paid on my purchases? and now I need LUT no. without this, the security doesn’t give an entry. how I can get LUT no.? Please provide the solution to this problem.
You can file LUT application online through GST portal. It is mandatory to obtain bond/LUT if supplying to SEZ without GST. Only then refund application will be accepted by the department.
I have supplied to SEZ unit and billed to another party without collecting any taxes. Is this OK? Can I get refund for INPUT for my purchases
Please look into this matter:-
1. Bill to Sez Noida by an event agency
2. Event held at Hotel in Delhi (Non-Sez Location) – i.e Ship to Location
Above transaction can be said “Supply to sez” and We have LUT so can we bill without tax
I have filed form GSTR RFD-11, I got ARN, Is this ARN number is LUT or I have to wait for any other document to be issued by Govt?
The second query is whether we have to show LUT/ARN in invoice??
The third query is We have billed to our SEZ customer and correctly charged IGST but in GSTR3B we have shown this particular transaction under Tax on outward supply.
We have not yet filed GSTR-1 if we will show this under 6B, whether it is correct?
We are in hotel industries while filing the error is showing (Reciever is of type SEZ. Please give invoice type as SEZ with payment or SEZ without payment) but we collected CGST and SGST And Paid. How to file the return?
Supply to SEZ unit should be made either with payment of IGST or with Bond/LUT. You will have to cancel the existing bill and reissue the same by complying with GST provisions.
I have to provide service to a unit that is in SEZ, can I file LUT?
IF you want to supply goods without payment of tax, then you can file LUT while exporting the goods.
Documents required for IGST supply in SEZ zone without export?
Dear sir,
During March 18 we have we have supplied the capital goods to LUT unit without knowing that they are LUT unit and we have billed and collected the CGST & SGST accordingly and filled 3 B. since the party has not mentioned it a LUT in their purchase order. Now while filling GSTR1 as soon as we enter the GST no of the party it shows LUT unit with or without IGST. can we rectify the same in GSTR1 and what are the tax liabilities freshly arises?
Thanks
Bhat.Gopinath
As you have supplied to SEZ unit, IGST would be applicable. So in your case, you first need to cancel the bill and then issue an invoice with IGST and need to pay the tax with interest.
I have to supply a product purchased locally by paying 18% GST (SGST & CGST) & to be supplied to a company in SEZ Zone. The company provided us with their exception certificate. How can or from where I can obtain a LUT to supply & billing the 0 Tax?
kindly help
You have to file LUT online at GST portal (Form GST-RFD-11).
What are the LUT Charges?
There are no charges for LUT. It can be filed online on GST portal after logging in.
We supply without (0%) GST to SEZ unit without LUT/Bond in the month of Jan-18 to March 18. any problem creates in future.
You can supply goods or services or both to SEZ without bond/LUT, but only on payment of integrated tax and claim refund of such tax paid in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder.
We are a service provider to SEZ unit in Dahej and GST is exempted for the said services. Please advise procedure for getting better from GST office. We have regn no ii pin code 400102
Our unit located at SEZ and we are registered with GST Act. We are getting IGST Input Tax from Bank charges and also getting input from Air travelling agent. My Query is that SEZ unit gets the refund for Input Tax. If no, what do for input tax. We are supplying goods to DTA with payment of duties and there is no option for utilised input tax.
As you are SEZ unit, so all input services received by you are not to be taxed so there will be no input tax credit stand on your part.
Dear Sir,
We are taking LUT on 10.05.2018, but we raised invoice of same LUT ARN no for 03.05.2018 its ok
Please confirm us if we apply LUT ARN No received on 10.05.2018, this LUT will effect from April 2018.
Dear Sir,
I Am a trader of industrial products from Hyderabad. I have received an order from a customer who is placed in SEZ in Telangana State. My supplier (manufacturer of the pump) is in other states. For normal transactions, I buy from him this supplier and pay IGST @ 18% and supply to my customers in Telangana State paying CGST @ 9% and SGST @ 9% and take input credit. Now, For this new order from an SEZ customer, how can I do the transaction, since I purchase the goods from non sez supplier in some other state. Please suggest. I will be grateful to you if you respond to my above issue immediately.
Eg: I am trader placed in Hyderabad (Telangana) and am Purchasing pumps worth of Rs 30,000/- from a manufacturer (supplier) in Gujarat and he will charge 18% IGST. I take it into my stock and have to supply to SEZ customer in Telangana state @ Rs 40,000/- Can I do this transaction without LUT and BG, by not charging IGST to my this customer in SEZ.
Regards
D.RAVIKUMAR
Supply of goods and services to SEZ Unit is considered as zero-rated and it can be made as:
IF BOTH THE PURCHASER & SELLER IS LOCATED IN SAME SEZ? WHAT IT WILL CONSIDERED FOR PURCHASER,?
IS IT,
DEEMED IMPORTS EXEMPT,
PUR. FROM SEZ – EXEMPT
PUR. FROM SEZ (WITHOUT BILL OF ENTRY) EXEMPT
INTERSTATE PURCHASE EXEMPT
Hi Dhiraj here., we are a turnkey contractor providing services to IT/ITES companies with office fit outs involving supply and installation of material/goods required for the office setup.
As per the SEZ rule, we have purchased material paying GST and we also have the LUT in place against which we have billed to our client on a ZERO rated basis.
Now that we have the GST accumulated with the department, we would like to apply for a refund.
Can you please guide me on the exact procedure to avail refund in this scenario.
Would appreciate an early response.
Thanks in anticipation..!!
You need to file form RFD-01 for a refund of the credit balance in ITC ledger.
Have already filed RFD 01. They are asking for an endorsement from the SEZ office on all material supplied Invoice. Kindly advise.
We are supplying goods to SEZ and want to supply without paying IGST. We just make supply to SEZ and Local units. We are not status holder as per Paragraph 5 of Foreign Trade Policy or taxpayer who has got foreign inward remittance which is at least 10% of export turnover. But our turnover in previous year contains supply to SEZ unit @15% of total turnover.
Should we apply for “LUT” or have to apply as “Supply made under Bond”.
As per the notification issued by CBEC in October, 2017 all the exporters, except those who have been prosecuted for any offence under the CGST Act or the Integrated Goods and Services Tax Act, 2017 or any of the existing laws and the amount of tax evaded in such cases exceeds two hundred and fifty lakh rupees, can file LUT for export without payment of IGST.
While filing GSTR 1, How we can show the invoice which is issued against LUT,& Also without Lut?
In both cases, you have to show it in under table 6 of GSTR-1.
We have done service billing to one of our SEZ customers and they have given LOA letter and there GST registration certificate. They have told us to get the LUT number to be mentioned on the invoice for Tax Exemption. But my question is that is there any option other then LUT number? And while applying this there is a Bank Guarantee to be provided, what is the percentage value of bank Guarantee should be given?
If you don’t want to file LUT, then you can charge the IGST on the bill and further claim the refund of the same. Percentage of guarantee depends upon the value of tax arises on exports or it differs from bank to bank.
Dear Sir,
We are providing service to SEZ unit, then we have to take any LUT or we can charge with GST in an invoice to SEZ unit. My question is we can charge GST and take input credit right? why do we need to obtain a LUT(Letter of Undertaking)?
You can opt for any of the option available i.e. either you can apply for LUT and not charge any GST or you can charge IGST and claim the refund of the same.
We are supplying pumps to SEZ under LUT with 0.01% IGST, we are purchasing goods (for supply to sez) from interstate, so are we supposed to get those goods at 0.01% IGST only?
SIR,
I HAD MADE INVOICE FOR SEZ IN THE MONTH OF AUGUST.IN THIS INVOICE SEZ CUSTOMER GIVE A FORMAT OF SEZ BILL.SO I MADE A BILL ON THAT FORMAT AS A BASIC+IGST= – LESS IGST. IS IT RIGHT? (NATURE OF TRANSACTION SALES TO SEZ TAXABLE)
NOW WE MAKE A INVOICE BASIC + IGST (NATURE OF TRANSACTION SALES TO SEZ TAXABLE)
ONLY ONE INVOICE OF LESS IGST FORMAT OTHERS ARE NOT.
SO CAN WE GET A CREDIT FOR ALL INVOICES?
WHAT CAN WE DO?
WHAT IS THE ACTUAL INVOICE FORMAT FOR SEZ?
There is no specified formal for invoice under GST. Only basic requirements as defined under the act have to be mention in the invoice if you are charging tax.
We have despatched SEZ supply for the month of Feb 18, with IGST payment, We have mentioned in 6B portion of GSTR1 Return and In GSTR 3B return we have mentioned the amount in zero-rated supply GSTR3b Item 3.1(B). we have found error At the time of GSTR1 FILING error is, Error! Invoice type can be SEWP/SEWOP only when either supplier or receiver is SEZ. please advise how to correct now.
Error! Invoice type can be SEWP/SEWOP only when either supplier or receiver is SEZ.
Either recipient’s GSTN is not of SEZ type of assesee or there is some technical issue so for that, you contact to GSTN helpdesk.
Dear Sir,
Many times we have amended the business core as a sez unit in our GST registration, but still, now We are facing a big trouble for your GST server error. Still, now our GSTIN 37AACCM2795F1ZB is not flagged as an SEZ Unit.
Contact to department.
Hello sir,
Can we get GST Invoice format for SEZ customer?
There is no specific format has been released by the department for invoice, only details mentioned under invoice rules of GST act have mandatorily to be entered in an invoice.
Hi sir,
We are SEZ unit person, our vendors sold goods to under LUT but they are asked IGST exemption certificate hence, shall we know the procedure?
Dear sir, we are a regular taxpayer in GST. We have purchased from Sez unit supplier taxable and we have paid IGST to the supplier. Can we claim input IGST or not?
Yes, you can claim the ITC for the same.
Sir, We want to supply materials Printing ink and Inks-Aid to Seepz Unit in Andheri…So should we charge them SGST / CGST or IGST? Thenafter we have to make any procedure or we have to mention anything specially in GST Return. How to file return…..If we are charging IGST than what.? We can claim set off and get input credit ? Please reply.
As you are supplying goods to SEZ unit, IGST will be charged and you have to report this txn. in column “nil rated supplies” under GSTR-3B and under column 6B of GSTR-1. By filing GSTR-1 you can claim the refund of IGST paid.
Hello, I am a regular taxpayer, kindly suggest me what can I supply (with payment of tax) to SEZ unit (intra-state). If yes, then what its effect in GSTR 1?
You can sell to SEZ unit with tax, and you have to show it in under “zero-rated supplies” column of GSTR-3b and under column 6B of GSTR-1 for claiming of refund.
but while filling GSTR 1, in 6B, option (SEZ supplies with payment) is not highlighting, kindly suggest me
KIndly ignore above message
My client is supply to the sez units by the bonds. How to treat in gstr3b,gstr 1 and how to uploded in gstr-1 ?
In GSTR-3B, you have to show it under Zero rated supply column and in GSTR-1, you have to show it in under column 6B i.e. supplies made to SEZ unit.
Dear Sir/Madam,
We have despatched SEZ supply for the month of Jan 2018, with IGST payment, We have mentioned in and In GSTR3B return we have mentioned amount in outward taxable supply in exempted supply GSTR3b Item 3.1(A) (instead of
Dear Sir/Madam,
We have despatched SEZ supply for the month of Nov 2017, with IGST payment, We have mentioned in 6A portion of GSTR1 Return and In GSTR3B return we have mentioned amount in exempted supply GSTR3b Item 3.1(C) (instead of Zero-rated supply GSTR3B Item 3.1 (b))Due to this we have found error At the time of GSTR1FILING error is, Error! Invoice type can be SEWP/SEWOP only when either supplier or receiver is SEZ. please advise how to correct now.
Error! Invoice type can be SEWP/SEWOP only when either supplier or receiver is SEZ.
You have to show it in under column 6B of GSTR-1.
Hello, I paid IGST of SEZ which is exempted for last three months i,e. Oct-Dec 2017 around 20000 each. Now I have to pay GST for Jan 2018 can I adjust it with SGST/CGST. Please let me know the procedure.
Thanks.
I am having SEZ unit and construction of my SEZ building is under process. For bringing material from local territory to SEZ who are unregistered, do I need to pay IGST on RCM basis considering it to be imported from INDIA? for registered persons, LUT is mandatory or not?
Since SEZ is considered to outside India, then IGST will be applicable. If the purchases are from unregistered dealer then provisions as applicable on imports are applicable.
Dear Sir, Please advise about e seal procedure. We have one-time stuffing permission of JNPT Mumbai port. Is it required for any permission about e seal?
Regards
The Board has sought to enhance export facilitation by dispensing the need for exporters seeking the presence of the jurisdictional officer for the purposes of supervising stuffing of the cargo at approved premises.
For detailed provisions please read the following circular: http://www.cbec.gov.in/resources/htdocs-cbec/customs/cs-circulars/cs-circulars-2017/circ41-2017cs.pdf
Dear Sir,
I have purchased some good in the state, and credit is SGST 1000 and CGSt 1000 Rs by mistake I have mentioned SGST Credit in IGST Column, in dec month return, Now I want to pay SGST in for the month of Jan 2018, can i use this SGST credit against SGST payment of Jan 2018 liability ? which is wrongly mentioned in IGST credit column instead of SGST column.
in GST R3B SGST == 0 CGST 2000, ISGT 2000
true figure as per credit is SGST 2000, CGST 2000 and IGST 000
please advise me what can I do about this mistake
You can adjust the SGST liability with your IGST credit.
Dear Sir/Madam,
We have despatched SEZ supply for the month of Nov 2017, with IGST payment, We have mentioned in 6A portion of GSTR1 Return and In GSTR3B return we have mentioned amount in exempted supply GSTR3b Item 3.1(C) (instead of Zero-rated supply GSTR3B Item 3.1 (b))Due to this we have found error At the time of refund application online on GST portal, please advise how to get refund now.
Contact to the department.
SEZ Unit can avail ITC credit on tax paid on procurement of Goods? Is there any procedure for claiming the refund of accumulated ITC by SEZ?
Please suggest as early as possible.
First you have to file Form GST RFD-01 on common portal, which deducts amount from your credit ledger and then you will receive an ARN (Acknowledgement receipt number) as the proof of debit of the ITC amount from your credit ledger, then you have to mention it on printed form GST RFD-01 and need to submit this manually to jurisdictional tax authority.
The GST RFD 01 filed has been rejected by the Nodal Officer stating that ” The Unit is situated in SEZ and as per Sec 16 of IGST Act, supply to such units is zero-rated, and hence you are not eligible for the refund. Further, till date, there is no circular / notification under which the refund can be granted.
Therefore the file is returned herewith”
Please help
As you are exporting to SEZ units, you do not need to file RFD-01, You can claim the refund by filing GSTR-3B and GSTR-1 for the concerned tax period.
Hi Sir,
We are hotelier & the SEZ companies are utilizing our services. But We are not part of the SEZ. So the SEZ companies are utilizing our services outside the SEZ. SO we should Charge normal CGST/SGST to such SEZ units or we have to charge IGST/LOUT.
As the place of supply in case of hotel services is the place where the hotel is situated, and as the hotel is situated out of SEZ, CGST+SGST would be leviable.
Even as a hotelier if the services are duly approved by the SEZ authorities like accommodation/banquets for the conference, IGST can be applied. The same can also be treated as zero-rated if the LUT is also filed by the recipient.
Who is the prescribed status holder??
Status holder exporters are defined under foreign trade policy 2015-2020. Various conditions have to be fulfilled for becoming a status holder exporter.
Dear Team, Please inform endorsement of SEZ authority on which – Whether on our Tax Invoice or a separate Letter from SEZ Authority – is there any format: For disclaimer format from SEZ Unit. Any other documents like the bill of supply; payment in foreign currency are also required please inform:
Dear Sir/Madam
We have supplied to SEZ unit. I want to know that which documents required by the application for submitted Refund our sez buyer is refusing to give any documents to us. Is it online file refund application or manually?
Regards
Joshi
An endorsement from the Proper Officer evidencing receipt of such goods in the SEZ should be submitted along with the tax invoice. Also, a declaration is also required from the SEZ unit that they have not availed input tax credit of the tax paid by the supplier. Refund application has to be filed online only. If an amount of refund is greater than Rs.2 Lakhs then a certificate from the chartered accountant is also required to that effect.
Hello, we are selling goods under LUT to SEZ. Is there any requirement to file a monthly statement with the commissioner as the precondition to sales under LUT to SEZ?
No there is no requirement to file a monthly statement as LUT is valid for one year and after the expiry of one year, LUT is to be furnished again.
Information is satisfactory but we required the format of letter of undertaking and whom it will be submitted.
Till the time Form GST RFD-11 is available on the portal for e-filing, you can manually submit it to the jurisdictional commissioner. Download the format through the link: https://blog.saginfotech.com/wp-content/uploads/2017/12/gst-rfd-11.pdf