Zero-Rated Supply Under GST: Exports and SEZ Supplies Explained
Zero-rated supply under GST covers exports of goods/services and supplies to SEZ (Special Economic Zone) units — taxed at 0%, but critically, the supplier can still claim full input tax credit on related purchases. This is different from an "exempt" supply, where no GST is charged but ITC on inputs is also blocked.
Zero-rated vs Exempt vs Nil-rated
| Type | Tax charged | Input Tax Credit |
|---|---|---|
| Zero-rated (export, SEZ) | 0% | Allowed |
| Exempt | 0% / not applicable | Blocked |
| Nil-rated | 0% (specific HSN) | Blocked |
Two ways to claim the zero-rating benefit
- Export under LUT without paying IGST: No cash outflow; you claim refund of accumulated input tax credit instead
- Pay IGST and claim refund: Pay tax on export, then file a refund application for the IGST paid — ties up working capital temporarily
Refund timeline
GST refunds for zero-rated supplies are meant to be processed within 60 days of a complete application; in practice, exporters using the LUT route combined with correct shipping bill data (integrated with ICEGATE) often see faster, more automated refunds of accumulated credit.
SEZ supplies specifically
Supplying goods or services to an SEZ unit or developer is treated as zero-rated, just like a physical export — even though the SEZ is geographically within India, it's treated as outside the customs territory for GST purposes.
Exporting or supplying to an SEZ? Our GST team structures your filings to maximise cash flow and minimise refund delays.