ZERO RATED SUPPLY UNDER GST
By following the principle of destination based taxation, exports continue to be Zero Rated and a similar benefit is given to Special Economic Zone (SEZ). These are supplies which if taxable,have to be made zero rated by refunding IGST paid on them.
Section 16 of IGST Act defines zero rated goods as-
a) Export of goods or services or both; or
b) Supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.
Section 2(5) of IGST Act defines “export of goods and services” as taking goods outside India to a place outside India.
Section 2(6) of IGST Act defines “export of services” to mean the supply of service when-
a) The supplier of service is located in India
b) The recipient of service is located outside India.
c) The place of supply of service is outside India
d) The payment for such service has been received by the supplier of service in convertible foreign exchange; and
e) The supplier of service and the recipient of service are not merely establishments of adistinct person.
ITC on supply of Export and SEZ supply:
Input Tax Credit is available on such supplies even if these are otherwise exempt.
Refund in case of exports and SEZ supply:
A registered person making such supplies can claim refund under either of the following options:
a) The dealer can export under Bond or Letter of Undertaking (LUT) and claim a refund of the accumulated Input credit of tax; or
b) The dealer can pay IGST while making the supplies and claim refund of the same.
Following documents are to be filed along with refund claim:
a) Proof of receipts of services which should be authorized by the specified officer of SEZ
b) Details of payment made
c) Declaration stating that the SEZ developer has not claimed ITC of the taxes paid by the supplier.
d) Statement containing date and no. of invoices.
e) Bank realization statement (in case of exporters of services).
Refund is available to exporters and SEZ developers on provisional basis. They are entitled to only 90% of the refund. This is available to them within 7 days of the refund claim and is directly credited to their bank account. One condition to claim refund is that the applicant should not be prosecuted for any offense under the GST or earlier law within past 5 years