Services to FTWZ

[Kaustubh Karandikar]

XYZ is providing management consultancy services to Free Trade Warehousing Zone (FTWZ). Whether it will be treated as export of service and if yes, whether XYZ is required to execute LUT for this transaction?

[Lav Prajapati]

Dear sir

Yes, XYZ is liable to execute LUT as per rule 96A ,

Any registered person availing the option to supply goods or services for export (i.e. outside India or SEZ Area)  without payment of integrated tax shall furnish, prior to export, a bond or a Letter of Undertaking in FORM GST RFD-11 to the jurisdictional Commissioner, binding himself to pay the tax due along with the interest.

[KASTURI SETHI]

FTWZ stands merged with SEZ scheme. So supply of service to SEZ is export of service. LUT is required. Also go through MC & I(DC) SEZ Instruction No.86 dated 18.5.14.

[Kaustubh Karandikar]

Thanks all the experts for your kind guidance.

[Shilpi Jain]

It will be in the nature of supply to SEZ. It is not an export of service but only a zero-rated supply. Can be done under LUT.

AI Summary

Zero-rated supply to SEZ: suppliers may use a Letter of Undertaking to export services without payment of integrated tax.
Supply of management consultancy services to FTWZ is treated as supply to an SEZ and therefore as a zero-rated supply. Suppliers opting for zero-rating without payment of integrated tax must furnish the prescribed security or a Letter of Undertaking in the specified form prior to supply, binding them to pay tax and interest if obligations are not met.