Goods and Services Tax – GST – By: – CA Seetharaman K C – Dated:- 25-7-2017 Last Replied Date:- 28-7-2017 – The position of SEZ Units is quite clear as per the IGST Act Section 16 (1) of which states very emphatically that the supplies made to SEZ s are zero rated. Moreover Section 16(2) of the IGST Act states that except for the inputs as specified in sub-section (5) of Section 17 of the CGST Act, input tax credit can be availed for all these zero-rated supplies made to the SEZ virtually signifying that all these taxes paid would be eventually refunded in parity with the maxim that Taxes should not be Exported Further Section 16 (3) goes to state that the supplier to the SEZ (Registered Person making supplies to the SEZ) has two options which are as follows: Submit a Letter of Undertaking (LUT) or a Bond and supply at zero rate to the SEZ and claim input tax paid on input for such supplies made to the SEZ OR Alternatively pay IGST on the goods or services supplied and claim the refun
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following registered person shall be eligible for submission of Letter of Undertaking in place of a bond: – (a) a status holder as specified in 1[paragraphs 3.20 and 3.21] of the Foreign Trade Policy 2015-2020; or (b) who has received the due foreign inward remittances amounting to a minimum of 10% of the export turnover, which should not be less than one crore rupees, in the preceding financial year, and he has not been prosecuted for any offence under the Central Goods and Services Tax Act, 2017 (12 of 2017) or under any of the existing laws in case where the amount of tax evaded exceeds two hundred and fifty lakh rupees. ii. The Letter of Undertaking shall be furnished in duplicate for a financial year in the annexure to FORM GST RFD – 11 referred to in sub-rule (1) of rule 96A of the Central Goods and Services Tax Rules, 2017 and it shall be executed by the working partner, the Managing Director or the Company Secretary or the proprietor or by a person duly authorised by such worki
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umber of the SEZ unit and are also willing to do the required entries while filing their sales details but they are not prepared to supply at zero rate to the units. The SEZ Units do not have any alternative but to pay the IGST charged by these suppliers to keep their production and exports going and only hope that the Government would be kind enough to refund these taxes paid by them till all this confusion settles. – Reply By Prasanna Cp – The Reply = As per section 16(1) Zero rated supply means: (a) export of goods or services or both; or (b) supply of goods or services or both to a SEZ developer or a SEZ unit. hence SEZ units making exports of goods and services will also be eligible to claim refund. – Reply By A K Reddy and CO – The Reply = Hello sir, A nice article, But I would like to bring to your notice that the Notification No. 18/2017 -Integrated Tax (Rate) New Delhi, the 5th July, 2017 clearly exempts services imported by a unit or a developer in the Special Economic Zone f
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oday after the advent of GST these SME units find it difficult to meet the conditions of Bond etc and are charging full IGST on their supplies made to SEZ units. Although it is a fact that the tax paid by the SEZ units can be claimed as refund as they are exporting their output, the fact remains that by declaring supplies being made to the SEZ as zero rated is not actually helping the SEZ units in any manner as the formalities surrounding the claiming of inputs by the supplier is so complicated that no supplier would venture to go into such problems and would instead prefer to charge the tax and forget about it. Hence these provisions are not helping SEZ units in any anyway and instead they are now paying IGST and will be able to claim the refund of these taxes paid only after their suppliers have filed their returns and paid the taxes and after the SEZ unit has exported the goods. – Reply By JAIPRAKASH RUIA – The Reply = Dear Sir, 1) In case of paying the IGST by supplier for SEZ supp
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