Supplies to SEZ

• Supplies from DTA to SEZ units or developers are treated as zero-rated
  
• Supplier can export under LUT without paying IGST or pay IGST and claim refund
  
• Goods or services must be used for authorized operations of SEZ
  
• Invoice must clearly mention supply to SEZ and support with endorsement
  
• E-way bill is mandatory if applicable based on value and distance
  

Supplies from SEZ

• Supplies made by SEZ units to outside India are exported and zero-rated
  
• Supplies to DTA from SEZ are treated as imports and taxed accordingly
  
• Goods/services moved from SEZ to non-SEZ units attract IGST and customs duties
  
• SEZ cannot claim exemption for supplies made to domestic markets
  
• DTA buyer must act as importer and pay applicable tax
  

Input Tax Credit and Refunds

• SEZ supplier can claim refund of IGST paid on inputs
  
• SEZ buyer may also claim refund on IGST charged if applicable
  
• Refunds processed through RFD-01 with proof of endorsement
  
• Credit notes, invoices, shipping bills are crucial for processing claims
  
• No ITC on supplies to SEZ under LUT mode since tax is not paid
  

Invoicing and Records

• Invoice must mention recipient’s SEZ registration and nature of supply
  
• Proper classification under zero-rated column in GSTR-1 is required
  
• Documentation must include SEZ unit’s endorsement and authorization letter
  
• Books must clearly separate SEZ supplies from regular domestic sales
  
• Internal registers must match return disclosures and refund claims
  

Compliance Best Practices

• Maintain LUT/Bond acknowledgments and renewal proof
  
• Obtain endorsed copies from SEZ officer for each supply
  
• Avoid misuse of SEZ supply category for tax avoidance
  
• Conduct regular internal audits for refund tracking
  
• Train accounts teams on DTA-SEZ differences and document requirements