SECTION 16 ZERO RATED SUPPLY (IGST ACT)
By: – Pradeep Jain
Goods and Services Tax – GST
Dated:- 26-12-2016
DAILY DOSE OF GST UPDATE BY CA PRADEEP JAIN
SECTION 16 ZERO RATED SUPPLY (IGST ACT):-
A new Chapter VIII has been introduced in the IGST Act wherein the concept of zero rated supply has been framed. The provisions contained in the section 16 are discussed as follows:-
Zero rated supply means any of the following taxable supply of goods and/or services, namely-
* Export of goods and/or services; or
* Supply of goods and/or services to a SEZ developer or an SEZ unit.
It is also provided that the credit of input tax may be availed for making zero rated supplies notwithstanding that such supply may be an exempt supp
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the SEZ developer or SEZ unit receiving zero rated supply shall be entitled to claim refund of IGST paid by registered taxable person on such supply.
On studying the above provisions, following implications may be drawn:-
* The meaning of zero rated supply is very restricted and limited to normal exports and supply to SEZ or SEZ developer. The supplies made to EOUs, EHTP, STP etc are not covered under the concept of zero rated supply.
* The input tax credit is available for zero rated supplies. This means that export without payment of duty and supply to SEZ will be considered as zero rated supply and credit will be available. Consequently, there will not be requirement to reverse credit even when the supplies are made without payment
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ns of SEZ Act have overriding effect and supplies to SEZ are to be considered as export. It appears that the present policy is carried forward in the GST regime too.
* It appears that the concept of 'deemed exports' will also be introduced in GST laws. This is evident from the definition of 'deemed exports' given under section 2(37) of the GST Act, 2016. It states that deemed exports as notified by the Central/State Government on the recommendation of the Council, refer to those transactions in which the goods supplied do not leave India and payment for such supplies is received either in Indian rupees or in convertible foreign exchange. At present, as per DGFT Laws, supplies to EOU is considered as deemed export and it may be possible th
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