Zero Rated Supplies to EOU/SEZ

[Asked by Guest]

Dear Sir,

We are manufacturers & want to supply goods to EOU/SEZ without charging them IGST. In earlier pre-GST regime, we used to supply against CT3. Is there any provision for EOU/SEZ for the same ?

Best Regards

Rakesh

[So B]

As per section 16(3) of the IGST Act supplies to SEZ will be considered as zero rated supplies.Zero rate supplies can be made with or without payment of tax.Therefore in case of supplies to SEZ supplier can supply without payment of tax and claim refund of accumulated credit.

However supply to EOU is considered as deemed supply and there is no such option available as provided for zero rated supply.In case of deemed supply either supplier or recipient can claim refund.

[PAWAN KUMAR]

Dear Sir,

Supply to EOU is deemed export supplies. For this purpose of supplying goods to EOU, government has prescribed Form A which is to be obtained by EOU and on the basis of which goods will be supplied to EOU. The taxes paid will be refunded either by EOU or supplier.

Further for supplies to SEZ, These are zero rated interstate supplies. These are fully exempted of paying IGST. Supplier has the option to pay IGST and claim refund or supply under LUT/Bond without payment of IGST.

[SRadhakrishna Bhandary]

I plan to set up a EOU in a Export Promotion Park at Mangalore, Karnataka. What is the Form-A mentioned in the earlier reply that I need to give my machine manufacturer for me to obtain the machinery at 0% tax?

I have given an 30% export obligation Bond to the Karnataka State Industrial Development Board.

[Kishan Barai]

The recipient EOU / EHTP / STP / BTP unit shall give prior intimation in a prescribed proforma in “Form–A” bearing a running serial number containing the goods to be procured, as pre-approved by the Development Commissioner and the details of the supplier before such deemed export supplies are made. The registered supplier thereafter will supply goods under tax invoice to the recipient EOU / EHTP / STP / BTP unit. On receipt of such supplies, the EOU / EHTP / STP / BTP unit shall endorse the tax invoice and send a copy of the endorsed tax invoice to the registered suppliers and its jurisdictional GST officer. The endorsed tax invoice will be considered as proof of deemed export supplies by the registered person to EOU / EHTP / STP / BTP unit. The recipient EOU / EHTP / STP / BTP unit shall maintain records of such deemed export supplies in digital form, based upon data elements contained in “Form-B” (appended herewith). The software for maintenance of digital records shall incorporate the feature of an audit trail. While the data elements contained in the Form-B are mandatory, the recipient units will be free to add or continue with any additional data fields, as per their commercial requirements. All recipient units are required to enter data accurately and immediately upon the goods being received in, utilized by or removed from the said unit. The digital records should be kept updated, accurate, complete and available at the said unit at all times for verification by the proper officer, whenever required. A digital copy of Form – B containing transactions for the month, shall be provided to the jurisdictional GST officer, each month (by the 10th of month) in a Pen drive, as convenient to the said unit. The above procedure and safeguards are in addition to the terms and conditions to be adhered to by an EOU / EHTP / STP / BTP unit in terms of the Foreign Trade Policy, 2015-20 and the duty exemption notification being availed by such unit.

[SRadhakrishna Bhandary]

Is the mere setting up of my unit at the Export promotion Industrial Park approved by the KIADB and the approval by the Single Window scheme by the Government of Karnataka be sufficient to declare my unit as an EOU or do I have to avail any special certification. I have also given an Export obligation bond to the Karnataka State Industrial Area Development Board (KIADB).

AI Summary

Zero rated supplies to SEZ allow supply without tax under LUT or refund; deemed exports to EOU require Form A.
Supplies to SEZ are zero rated: suppliers may supply under bond/LUT without payment of tax and claim refund, or pay IGST and seek refund. Supplies to EOU are deemed exports: recipient must provide prescribed Form A, supplier issues tax invoice which must be endorsed and sent to the supplier and jurisdictional officer as proof; taxes paid are refundable to either supplier or recipient. Recipient units must maintain digital records per Form B with an audit trail and submit monthly transaction data to the jurisdictional officer.