Provisions under Section 16 of the Integrated Goods and Services Tax (IGST) Act, 2017 relating to “Zero Rated Supply”, are as under:
Section 16 of IGST Act 2017: Zero Rated Supply (CHAPTER VII – ZERO RATED SUPPLY)
(1) “zero rated supply” means any of the following supplies of goods or services or both, namely:–
(a) export of goods or services or both; or
(b) supply of goods or services or both for authorised operations to a Special Economic Zone developer or a Special Economic Zone unit. [Refer Note 2(a)]
(2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply.
(3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:–
(a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or
(b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied,
in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder. [Refer Note 2(b)]
(3) A registered person making zero rated supply shall be eligible to claim refund of unutilised input tax credit on supply of goods or services or both, without payment of integrated tax, under bond or Letter of Undertaking, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder, subject to such conditions, safeguards and procedure as may be prescribed:
Provided that the registered person making zero rated supply of goods shall, in case of non-realisation of sale proceeds, be liable to deposit the refund so received under this sub-section along with the applicable interest under section 50 of the Central Goods and Services Tax Act within thirty days after the expiry of the time limit prescribed under the Foreign Exchange Management Act, 1999 for receipt of foreign exchange remittances, in such manner as may be prescribed.
(4) The Government may, on the recommendation of the Council, and subject to such conditions, safeguards and procedures, by notification, specify,-
(i) a class of persons who may make zero rated supply on payment of integrated tax and claim refund of the tax so paid;
(ii) a class of goods or services which may be exported on payment of integrated tax and the supplier of such goods or services may claim the refund of tax so paid. [Refer Note 2(b)]
Amendments History:
1. CBEC notifies 01/07/2017 as the Commencement date for Section 16 of the IGST Act 2017, vide Integrated Tax Notification 3/2017 dt. 28/06/2017.
2. Amendments made by Section 123 of the Finance Act 2021: GOI Notification dt. 28/03/2021, pending Notification on commencement date:
(a) in sub-section (1), in clause (b), the text “for authorised operations” inserted after the text “supply of goods or services or both”;
(b) sub-section (3) substituted and sub-section (4) inserted;
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Note: The IGST Act, 2017 has been notified vide GOI Notification dt. 12/04/2017, which has subsequently been amended through IGST (Amendment) Act, 2018. Finance Act, 2019, Finance Act, 2020, Finance Act, 2021, including various Notifications issued by the Govt./ CBIC from time to time, relating to the commencement dates of various Sections/ Provisions in the respective IGST/ Amendment Acts, wherever required. Information on this page is a Section-wise compilation of Amendments made by all such Notifications, with best possible efforts for accuracy. In any case, E&OE. For official/ updated information, please visit CBIC website.
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Does the GST exemption for SEZ units applicable for all products which are sold to them or only those which are used by them for manufacturing and exports? To be specific we deal in hot beverages and snacks and we sell such items to SEZ units which are used by their employee’s.
At the time of export of goods, shipping bill filed with 5% IGST and procured the goods locally with CGST 2.5% and 2.5% SGST. At the time of filing GSTR-3B, IGST liability adjusted against the input of local purchases. Whether the input claim tantamounts to payment under section 16 or not? to claim refund from the department.