Service Note / Indirect Tax
Export & SEZ GST Compliance
A clear account of how GST applies to exports of goods and services and to supplies made to Special Economic Zones, and of the records, returns and reconciliations that support each position.
Topics covered: zero-rated supplies · Letter of Undertaking (LUT) · refund claims · SEZ supplies · documentation · GSTR-1 and GSTR-3B · e-invoicing · reconciliation
01 — Overview
Export GST compliance in brief
Under GST, exports of goods and services and supplies to an SEZ developer or unit are treated as zero-rated supplies. Zero-rating means the supply can be made without charging tax, or with tax paid and a refund claimed afterwards, subject to the conditions of the law.
The treatment is straightforward in principle. In practice it depends on documentation, correct reporting in GSTR-1 and GSTR-3B, e-invoicing where applicable, and reconciliation between books, returns and shipping or banking records. This page sets out how those pieces fit together. For a broader view of related GST work, see Comprehensive GST Solutions for Businesses & Startups.
02 — Scope
Scope of the work
Exports of goods and services
Determining whether a supply qualifies as an export, including place of supply, receipt of payment in convertible foreign exchange where required, and the status of the recipient.
Letter of Undertaking (LUT)
Assessing eligibility for exporting without payment of integrated tax, preparing the LUT filing, and tracking its validity and the conditions attached to it.
Refund claims
Computing and supporting refunds of integrated tax paid on exports, or of unutilised input tax credit on zero-rated supplies made under LUT, along with responses to related notices.
SEZ supplies
Reviewing supplies to SEZ units and developers, the endorsement and authorisation documents involved, and the invoicing and tax treatment applied.
Returns and e-invoicing
Reporting export and SEZ supplies correctly in GSTR-1 and GSTR-3B, and aligning invoice data with e-invoicing requirements where they apply to the taxpayer.
Reconciliation
Matching books of account, GST returns, shipping bills, export invoices and bank realisation records so that differences are identified and explained.
03 — Process
A working checklist for exporters and SEZ suppliers
Step 1
Classify the supply
Confirm whether each transaction is an export of goods, an export of services, a supply to an SEZ, or a deemed export, since the conditions and documents differ for each.
Step 2
Decide the tax route
Choose between supplying under LUT without payment of tax, or paying integrated tax and claiming a refund. Check that the LUT is in force for the relevant period before supplies begin.
Step 3
Issue compliant invoices
Ensure invoices carry the required particulars, the correct declaration on tax treatment, and, where e-invoicing applies, a valid invoice reference number generated before the invoice is issued.
Step 4
Assemble supporting documents
- Export invoice, packing list and shipping bill or bill of export
- Bill of lading, airway bill or other proof of export
- Bank realisation certificate or other evidence of payment, for services and goods as applicable
- For SEZ supplies: the authorised operations or endorsement documents from the unit or developer
Step 5
Report in GSTR-1 and GSTR-3B
Disclose zero-rated supplies in the correct tables of GSTR-1 and the corresponding outward supply sections of GSTR-3B, keeping the tax-paid and without-payment categories separate.
Step 6
Reconcile and review
Periodically compare the sales register, GSTR-1, GSTR-3B, shipping bill data and bank receipts. Record the reason for each difference and resolve it before a refund claim is prepared.
04 — Risk
Common compliance risks
Most difficulties in export and SEZ compliance arise from mismatches between records rather than from the tax position itself. These are the areas that tend to need the closest attention.
LUT not in force
Supplies made without payment of tax when no valid LUT covers the period can lead to tax, interest and a demand for payment.
Return and shipping bill mismatches
Differences between invoice values in GSTR-1 and shipping bill data can hold up refund processing and prompt queries.
Payment realisation gaps
Where payment for an export is not received within the permitted period, the zero-rated treatment may be questioned.
Incorrect SEZ documentation
Supplies to an SEZ without the required endorsement or authorisation can lose their zero-rated status.
E-invoicing and reporting errors
Export invoices reported in the wrong category, or issued without a required invoice reference number, create downstream errors in returns.
Refund claims without a reconciled base
Refund applications built on unreconciled data are more likely to draw deficiency memos or partial sanction.
05 — Questions
Frequently asked questions
What is a zero-rated supply under GST?
A zero-rated supply is an export of goods or services, or a supply of goods or services to an SEZ developer or unit. It is taxed at a zero rate, so that tax does not remain embedded in the exported supply. The supplier may either supply under LUT without paying integrated tax, or pay the tax and claim a refund.
What is an LUT and who can use it?
A Letter of Undertaking is a declaration filed on the GST portal that allows eligible registered persons to make zero-rated supplies without paying integrated tax. Eligibility and validity are governed by the GST law and notifications in force, which should be checked for the relevant period.
How are refund claims on exports made?
Refunds are claimed through an application on the GST portal. For exports with payment of tax, the refund of integrated tax is generally processed on the basis of shipping bill and return data. For exports under LUT, the claim is for unutilised input tax credit and is computed using the prescribed formula, with supporting documents.
How are SEZ supplies different from exports?
Both are zero-rated, but an SEZ supply is made within India to a unit or developer, so the conditions, recipient authorisation and supporting documents differ from those for an export out of India. Place of supply and invoicing treatment should be confirmed for each transaction.
Why does reconciliation matter for export GST?
Export supplies are reported in several places: the books, GSTR-1, GSTR-3B, shipping bill data and bank records. Reconciling these identifies differences early, supports the figures used in a refund application, and makes any later query easier to answer with evidence.
06 — Contact
A note on getting in touch
If you have a question about export or SEZ GST treatment, you can write to Sagar S Gupta & Co. at the address below. Please include a short description of the supply and the period concerned. Replies are based on the facts provided and the law as it applies at the time. You can also reach out through our Contact Us page.
Email: office@cassgc.org
This page is general information about GST treatment of exports and SEZ supplies. It is not legal or tax advice, and it does not describe every situation. Rules, notifications and procedures change, so the position for any specific transaction should be confirmed against the law in force.