GST Refund on Civil Contracting for SEZ

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Director
75 Points Posted on 25 November 2020

We provide Civil Contracting services to SEZ in India.

We do not charge GST to client under FORM GST RFD – 11 (Letter of Undertaking for Exports of Goods or Services).  However we have to pay GST to all suppliers of various input Materials and sub-contracting services used in the project.

We have 2 questions

  1. Apart from PO, do we need any document from Client after the contract is over to justify non charging of LUT.
  2. Is there a way to avoid paying GST on input credit by informing our suppliers.
    1. If No, can we claim refund of input GST from Department?
    2. If no, can we ask suppliers to not charge GST on their supply since we are providing SEZ Services.
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On 25 November 2020 at 18:19 Report
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Quick Summary
Civil contractors working for Special Economic Zones (SEZs) in India face challenges with GST on input materials and services when they don't charge GST to the client under a Letter of Undertaking. This discussion clarifies that endorsed invoices from SEZ authorities, along with the client's SEZ approval letter, are crucial for justifying non-charging of GST. These documents enable contractors to claim a refund of input GST paid to suppliers. While outright exemption for services is difficult, obtaining these endorsed invoices is key to securing a cash refund of Input Tax Credit (ITC).

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GST consultants
89 Points Posted on 26 November 2020

1. To be on a safer side, SEZ customer will have to get your invoices endorsed by the SEZ authorities and provide to you (under rule 89 of CGST/SGST Rules and SEZ Rules). Endorsed invoices along with customer's SEZ letter of approval copy may be kept in your records, since these may be asked during scrutiny by tax officers. 

2.  If endorsed invoices are availed in terms of (1) above, then you may apply for refund of GST charged by your suppliers and obtain cash refund of the ITC from tax authorities. Outright exemption may be difficult unless any deemed export benefit is claimed under FTP which is available only for goods and not services. 

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On 26 November 2020 at 17:01
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Director
75 Points Posted on 13 December 2020

Thank you sirs

Very helpful.

 

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On 13 December 2020 at 21:34

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