TaxTMI 
TaxTMI 
Security Service done by other than body corporate to SEZ unit.
SEZ unit has to pay the tax under RCM. Please confirm, am I right?
Security Service by Other than body corporate to SEZ
16 May 2021 
7 Replies 
2857 Views Asked by
Zero-rated supply to SEZ units and reverse charge uncertainty may require safeguards like an LUT to mitigate GST risk.
Supply of services to an SEZ unit is treated as a zero-rated supply under Section 16(1)(b) of the IGST Act, so the supplier is not liable to tax; accordingly there is no basis to impose tax on the SEZ recipient under the reverse charge mechanism. However, a departmental FAQ treating the recipient as a "deemed supplier" and a departmental communication denying RCM liability for SEZs have created conflicting guidance, and practitioners recommend procuring an LUT while noting GSTR 1 reporting limitations affecting RCM selection. (AI Summary)
Supply of services to an SEZ unit is treated as a zero-rated supply under Section 16(1)(b) of the IGST Act, so the supplier is not liable to tax; accordingly there is no basis to impose tax on the SEZ recipient under the reverse charge mechanism. However, a departmental FAQ treating the recipient as a "deemed supplier" and a departmental communication denying RCM liability for SEZs have created conflicting guidance, and practitioners recommend procuring an LUT while noting GSTR 1 reporting limitations affecting RCM selection. (AI Summary)