GST meaning · updated October 2026

Supplies to SEZ units and developers under GST

Supplies to a Special Economic Zone unit or developer are zero-rated under GST, like exports. The supplier can supply without tax under a Letter of Undertaking, or pay IGST and claim refund, subject to conditions.

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Legal basis

Section 16(1)(b) of the IGST Act treats supply of goods or services to an SEZ developer or unit for authorised operations as zero-rated. Section 7(5)(b) of the IGST Act treats any supply to an SEZ as inter-state, so IGST applies where tax is charged, even if the supplier is in the same state.

The words for authorised operations matter. Supplies not used in the SEZ's approved activities may not qualify.

How to supply

  • Under LUT: file Form RFD-11 for the financial year and supply without IGST, then claim refund of unutilised ITC.
  • With payment of IGST: charge IGST and claim refund of the tax paid, where this option is available under the current rules.
  • The invoice should state the supply is to an SEZ under LUT or with payment of IGST.
  • Report SEZ supplies separately in GSTR-1.
  • Keep the endorsement or proof from the specified SEZ officer that goods were admitted or services received for authorised operations.

Refund points

The refund is claimed by the supplier in RFD-01, not by the SEZ unit, unless specific conditions apply. Missing SEZ endorsements, wrong tax head and supplies outside authorised operations are the main reasons for deficiency memos. A professional can review documents before filing.

Get it handled for you

Refund stuck or rejected? We rebuild the claim, reply to deficiency memos and follow up with the refund officer in writing. Call or WhatsApp +91 63677 44602, or use the form below.

This guide explains the law in general terms as of October 2026. Time limits and requirements can depend on the facts of your case and on the notice you received.

Questions

SEZ supply — FAQs

Is a supply to an SEZ in my own state intra-state?+
No. Supplies to an SEZ are treated as inter-state, so IGST applies where tax is charged.
Who claims the refund on SEZ supplies?+
Generally the supplier, using RFD-01 with the required SEZ endorsement and documents.
Is supply from an SEZ to the domestic tariff area zero-rated?+
No. Clearances from an SEZ into India are treated as imports and are subject to customs duty and IGST.
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