⚡ Special Economic Zone (SEZ) • India GST Guide

SEZ GST Compliance Guide

Rules, compliance checks, and double-entry accounting procedures for DTA to SEZ sales and SEZ exports.

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domain_add 1. SEZ Overview & Transaction Boundary

GST treats Special Economic Zones as foreign territories for tax purposes. This distinct boundary alters the taxability of transactions crossing into or out of the zone.

DTA (Domestic Area)
Standard Indian Territory
Zero-Rated Supply (LUT) arrow_forward
arrow_back Imports (BCD + IGST)
SEZ Unit / Developer
Deemed Foreign Territory
  • adjust SEZ units/developers are treated as distinct persons under GST. A separate registration is required.
  • adjust Supplies between DTA and SEZ units are always treated as Inter-State Supplies (subject to IGST, never CGST/SGST).

2. Zero-Rated Supply Compliance Tracker

Step 1
LUT Submission
File Letter of Undertaking online annually before supply.
Step 2
Invoice Booking
Issue invoice with specific zero-rated declaration.
Step 3
SO Endorsement
Obtain validation receipt from SEZ Specified Officer.
Goal
ITC Refund
File Form RFD-01 to claim refund on raw material ITC.

A. Supplies to SEZ

Supplies to SEZ units are zero-rated. Can be executed under LUT without paying tax or with IGST payment and refund.

B. Supplies from SEZ

Treated as import of goods/services by DTA. Recipient pays IGST + Basic Customs Duty (BCD) via custom bills.

C. Exports from SEZ

Goods and services exported by SEZ units to foreign countries are completely zero-rated without IGST charges.

Accounting Entries for SEZ (Under GST)

A. Supply of Goods to SEZ (Zero-Rated)

Particulars Dr. (₹) Cr. (₹)
SEZ Unit A/c (Dr.) XXX -
To Output IGST A/c - XXX
To Input Tax Credit (ITC) Rec. - XXX

B. Supply of Goods from SEZ to DTA (Taxable)

Particulars Dr. (₹) Cr. (₹)
DTA Customer A/c (Dr.) XXX -
Output IGST A/c (Dr.) XXX -
To SEZ Unit Sales A/c - XXX

C. Purchase of Goods from DTA by SEZ Unit

Particulars Dr. (₹) Cr. (₹)
Goods/Asset A/c (Dr.) XXX -
Input CGST/SGST/IGST (Dr.) XXX -
To DTA Supplier A/c - XXX

D. Export of Goods/Services from SEZ Unit

Particulars Dr. (₹) Cr. (₹)
Export Receivable/Bank (Dr.) XXX -
To SEZ Unit Sales A/c - XXX
To Output IGST A/c - XXX

Common GST Compliance Points for SEZ

  • check_circle Ensure valid LUT (Letter of Undertaking) is submitted online before executing zero-rated supplies.
  • check_circle Verify that invoice contains mandatory declaration: "SUPPLY TO SEZ UNIT FOR AUTHORIZED OPERATIONS UNDER LUT WITHOUT PAYMENT OF INTEGRATED TAX".
  • check_circle Confirm that GSTIN validation is executed for the distinct SEZ unit registration (different from parent DTA GSTIN).
  • check_circle Filing returns: Map SEZ transactions in GSTR-1 Table 6B (Zero Rated Supplies) and GSTR-3B.
  • check_circle Validate the Endorsement Certificate from the SEZ Specified Officer (SO) for goods receipt to prove "authorized operations" and secure GST refunds.