Guides · GST
SEZ supplies under GST
A Special Economic Zone is treated as outside the domestic tariff area for GST, so supplies to a SEZ unit or developer are zero-rated — put on the same footing as exports.
Why SEZ supplies are zero-rated
GST treats supplies to a SEZ unit or developer as zero-rated, meaning the supply is relieved of tax through the chain rather than simply exempted. That distinction matters, because zero-rating preserves input tax credit while an exemption does not.
As with exports, a supplier to a SEZ can either pay IGST and claim a refund, or supply under an LUT or bond without paying IGST and claim a refund of unutilised credit.
Why documentation matters here
Zero-rated SEZ supplies rely on the paperwork being right — the supply being correctly identified as a SEZ supply, with the endorsements and evidence the process needs to support a refund. Loose records are where SEZ refund claims get stuck.
The specifics are set by the rules and can change, so the current requirements should be confirmed for any SEZ transaction.
How Lekha records SEZ supplies
Lekha records the invoice for a SEZ supply with its details kept in the two-sided ledger, so the supply is documented alongside the rest of the sales side.
Lekha records what your documents say and tracks the money on both sides — what you owe and what you are owed. It records and tracks; it does not replace your accountant.
Questions
- How are SEZ supplies treated under GST?
- As zero-rated, like exports — the supply is relieved of tax through the chain, and input tax credit is preserved rather than lost.
- What is the difference between zero-rated and exempt for a SEZ supply?
- Zero-rating relieves the whole supply and preserves input tax credit; an exemption removes the tax but does not allow the related credit. SEZ supplies are zero-rated.
- What are the two ways to make a SEZ supply?
- Pay IGST and claim a refund, or supply under an LUT or bond without paying IGST and claim a refund of unutilised input tax credit.
This guide is general information, not legal or tax advice. Confirm the current rules and your own circumstances for any specific case.