GST Advisory on Exports, SEZ, Imports & Cross-Border Transactions

It covers the full range of GST questions that arise whenever a supply crosses the Indian border — physically as an export or import of goods, contractually as an export of services, through a Special Economic Zone, or between related entities of an India-overseas group. This includes classification (does this genuinely qualify as export/zero-rated supply), documentation (LUT, endorsements, FIRC matching), reconciliation (import credit against ICEGATE/GSTR-2B), refund filing (Rule 89(4)), and departmental representation when a cross-border position is questioned.

Two structural reasons. First, classification questions — is this genuinely an export, or an intra-entity cross-charge; is this SEZ supply within 'authorised operations' — are judgement calls with real consequences if wrong, and the error is rarely caught at the time of invoicing; it surfaces at refund scrutiny or audit, often 12–24 months later, by which point every invoice under the same treatment carries the same exposure. Second, cross-border transactions sit at the intersection of GST, Customs, DGFT, and FEMA — each with its own documentation and timelines — so a gap in any one framework can undermine the position taken under another.

Under Explanation 1 to Section 8 of the IGST Act, an establishment in India and an establishment outside India of the same legal person are treated as 'establishments of distinct persons' for certain purposes, but critically, Section 2(6) of the IGST Act excludes a supply from qualifying as 'export of services' where the supplier and recipient are merely establishments of a distinct person under that Explanation — meaning a branch, liaison office, or project office billing its own foreign head office (same legal entity) is not making an export of services in the GST sense, regardless of currency, contract wording, or FIRC receipt. A separately incorporated Indian subsidiary billing its foreign parent is a different legal person entirely and does not fall foul of this exclusion — that arrangement, if the other Section 2(6) conditions are met, can genuinely qualify as export.

Not automatically — it depends on all five conditions under Section 2(6) being met: supplier in India, recipient outside India, place of supply outside India, payment in convertible foreign exchange or permitted INR, and supplier and recipient not being merely establishments of the same distinct legal person. A genuinely separate subsidiary billing its foreign parent generally clears the 'distinct persons' condition (since a subsidiary is a distinct legal person from its parent), but the place-of-supply determination under Section 13 still needs to be tested for the specific nature of services, and payment must actually be received in the qualifying currency/route.

A LUT, filed in Form GST RFD-11 under Rule 96A of the CGST Rules, is a self-declared annual undertaking that allows a registered exporter to invoice zero-rated exports or SEZ supplies without paying IGST upfront, instead claiming a refund of accumulated input tax credit. It is required for any exporter or SEZ supplier who wants to invoice without IGST; the alternative is paying IGST on every invoice and separately claiming a refund of the tax paid, or — in the narrow case of a person prosecuted for tax evasion exceeding ₹2.5 crore — furnishing a bond with bank guarantee instead.

Import of goods attracts Integrated GST (IGST) under Section 5(1) of the IGST Act, in addition to Basic Customs Duty, both collected by Customs authorities at the point of clearance — evidenced by the Bill of Entry. This IGST is generally available as input tax credit to the importer, provided the goods are used in the course or furtherance of business, but the credit flows through a specific data pathway: the ICEGATE customs system transmits Bill of Entry data to GSTN, which auto-populates the import IGST in the importer's GSTR-2B. A domestic purchase, by contrast, generates IGST/CGST/SGST credit through the supplier's own GST return filing (GSTR-1/GSTR-3B), not through customs.

A mismatch between the Bill of Entry IGST actually paid and what auto-populates in GSTR-2B needs to be investigated — common causes include a provisional (not yet finalised) Bill of Entry, a data transmission delay between ICEGATE and GSTN, an incorrect GSTIN quoted on the Bill of Entry, or duty paid under a different import document type. Until the mismatch is resolved, claiming the credit purely from the Bill of Entry without GSTR-2B support carries a risk of departmental query, since GSTR-2B is the reconciliation reference point GST officers use.

A Special Economic Zone, established under the SEZ Act, 2005, is a designated geographic area treated as being outside the customs territory of India for specified purposes. Under Section 16 of the IGST Act, a supply of goods or services to an SEZ developer or SEZ unit, for authorised operations, is a zero-rated supply — treated on the same footing as a physical export outside India. The supplier (not the SEZ unit) needs a valid LUT (or bond) to invoice such supplies without IGST, exactly as it would for an overseas export.

Zero-rating under Section 16 of the IGST Act for SEZ supplies applies specifically to supplies made 'for authorised operations' of the SEZ unit or developer — meaning the activities that unit or developer is approved to carry out under its SEZ letter of approval. A supply that falls outside the scope of the SEZ unit's authorised operations does not automatically qualify for zero-rating merely because the buyer happens to be located in an SEZ. Suppliers should obtain and retain the SEZ unit's endorsement/certification confirming the specific supply is for authorised operations.

A sale of goods by an SEZ unit into the Domestic Tariff Area is generally treated as an import into India by the DTA buyer — the DTA buyer files a Bill of Entry for clearance and pays applicable customs duty and IGST at that point, broadly as if the goods were imported from outside India, even though the SEZ is geographically within India. This is governed jointly by the SEZ Act/Rules and Customs law, and the DTA buyer can generally avail input tax credit of the IGST paid at clearance, subject to the usual conditions.

For a business with recurring, regular export volume, the LUT route is almost always the better working-capital choice — it avoids funding IGST out of pocket on every invoice and instead recovers accumulated input tax credit periodically under Rule 89(4). The IGST-paid-and-refund route is occasionally preferable for a single, non-recurring export shipment, or in the rare case an exporter is statutorily barred from LUT (prosecution for tax evasion exceeding ₹2.5 crore under Notification 37/2017).

Under Rule 96A of the CGST Rules, goods must be exported out of India within 3 months from the date of the export invoice. If not exported within this period (absent an extension granted by the proper officer), the exporter becomes liable to pay the IGST that would otherwise have applied, plus interest at 18% per annum computed from the date of the invoice.

Rule 96A allows one year from the date of the export invoice for the proceeds to be realised in convertible foreign exchange (or permitted INR), unless the proper officer allows a longer period. Missing this deadline triggers the same consequence as goods — the IGST that would have applied becomes payable, with 18% per annum interest from the invoice date.

Yes, generally. An Importer Exporter Code (IEC), issued by the DGFT, is a separate and independent requirement from GST registration for any business physically importing or exporting goods, and is required alongside — not instead of — GST compliance. Services exporters may not always need an IEC depending on the nature of the service and payment mechanism, but goods importers and exporters almost always need both an active IEC and correct GST treatment running in parallel.

The September 2025 GST rate rationalisation moved most domestic goods and services onto a simplified 5%/18%/40% slab structure, replacing the earlier four-slab 5%/12%/18%/28% framework. This governs the rate applicable to domestic taxable supplies. Export and SEZ supplies made under a valid LUT remain zero-rated regardless of what domestic slab the underlying goods or services would otherwise attract. However, the rate change is directly relevant to two things: the ITC refund computation under Rule 89(4), since the credit being refunded arises from GST paid on domestic inputs at the applicable domestic rate, and the IGST rate on imports of goods, which generally mirrors the domestic GST rate applicable to like goods under Section 5(1) of the IGST Act read with Section 3 of the Customs Tariff Act.

It depends on the corporate relationship and the nature of the charge. If the overseas recipient is a genuinely distinct legal person (a separately incorporated subsidiary or a third party, not a branch or liaison office of the same legal entity as the Indian charging entity) and the arrangement otherwise meets the Section 2(6) export-of-services conditions — including place of supply outside India and payment in convertible foreign exchange — the cross-charge can generally be treated as a zero-rated export of services. If instead the 'recipient' is the same legal person's own overseas establishment (branch, liaison, or project office of the Indian entity, or vice versa), no export supply arises in the GST sense at all — the flow needs a different analysis entirely.

Transfer pricing under the Income-tax Act governs whether the pricing of a cross-border related-party transaction is at arm's length for income-tax purposes, and is a separate regime from GST. However, the two frequently need to be considered together: an intercompany service fee or cross-charge structured for transfer pricing purposes must also be independently tested for its GST treatment (is it a taxable supply, an export, or outside the scope of supply because the parties are the same legal person), and inconsistencies between the transfer pricing documentation and the GST invoicing position can itself become a point of departmental scrutiny on either side.

At minimum: LUT acknowledgements and ARNs for each financial year, every export/SEZ invoice with the correct zero-rating endorsement, shipping bills (goods) or FIRC/BRC (services) matched to each invoice, Bills of Entry and IGST payment challans for imports with GSTR-2B reconciliation working papers, SEZ authorised-operations endorsements, corporate structure documentation supporting any distinct-persons analysis, Rule 89(4) refund computation workings, and correspondence for any Rule 96A extension sought. These should be retained for at least the statutory record-retention period under Section 36 of the CGST Act.

Under Section 54 of the CGST Act, a refund application must be filed within two years from the 'relevant date' — for zero-rated goods, generally linked to the date of export as evidenced by the shipping bill; for zero-rated services, linked to the date of receipt of payment in convertible foreign exchange, or the invoice date if payment is received in advance. Refunds not claimed within this window are permanently forfeited, with no condonation for a simply-missed deadline.

No. A composition dealer under Section 10 of the CGST Act is restricted to intra-state supply and cannot make inter-state supplies, exports, or supplies to SEZ units — this restriction is inherent to the composition scheme. A business intending to export, import for resale, or supply to an SEZ must be registered under the regular GST scheme; cross-border activity of this kind is simply not available to a composition taxpayer.

Duty Drawback and the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, both administered by the DGFT/Customs framework under the Foreign Trade Policy, are separate from GST zero-rating — they refund customs duties and certain embedded taxes not otherwise neutralised through the GST credit chain. An exporter can generally claim GST zero-rating (via LUT and Rule 89(4) refund) and DGFT-administered incentives like RoDTEP or duty drawback simultaneously on the same export, but the shipping bill and export documentation must be consistent across both claims — a mismatch between what is declared for GST zero-rating purposes and what is claimed under RoDTEP/drawback is a common cross-departmental scrutiny trigger.

Advance Authorisation (allowing duty-free import of inputs physically incorporated into an export product) and the Export Promotion Capital Goods (EPCG) scheme (allowing duty-free import of capital goods used in export production), both administered under the DGFT Foreign Trade Policy, primarily concern customs duty exemption rather than GST directly — but IGST on such imports may also be exempted or deferred under specific notifications tied to these schemes, and the export obligation under both schemes must be tracked and fulfilled within prescribed periods, with GST-side export documentation (shipping bills, LUT, invoices) forming part of the evidence of export obligation fulfilment.

Potentially yes, but only where the specific INR payment mechanism is one RBI has actually permitted for that export transaction. Section 2(6) of the IGST Act requires payment 'in convertible foreign exchange or in Indian rupees where permitted by the Reserve Bank of India' — RBI has permitted rupee settlement in specific arrangements over time (for example, certain Special Rupee Vostro Account mechanisms for trade with particular countries). It is not automatic that any INR receipt from a foreign client qualifies; the specific mechanism needs to be verified against the applicable RBI permission.

Section 13 of the IGST Act determines the place of supply for services where the supplier or recipient is located outside India. The general rule treats the place of supply as the recipient's location, but several specific categories carry their own rule — services related to immovable property (location of the property), intermediary services (location of the intermediary, generally India, which can take the transaction out of 'export' treatment even if the client is genuinely overseas), and a handful of other categories. Getting the place-of-supply determination right is one of the five conditions that must independently be satisfied for a cross-border service to qualify as a zero-rated export.

Respond within the statutory timeline with a substantive, document-backed reply — addressing each ground raised in the notice specifically, supported by the underlying corporate structure documentation, contracts, FIRC/BRC evidence, and the place-of-supply analysis, rather than a generic re-submission of previously filed documents. Where the notice raises a genuinely disputed legal question (such as a distinct-persons determination), a reasoned legal position with supporting precedent, prepared by a practitioner familiar with the specific fact pattern, materially improves the outcome compared to an unrepresented or templated response.

Rule 96A allows the proper officer to extend the export or realisation period on a genuine request made before the original deadline lapses. Once the deadline has already passed without an extension being sought, the IGST-plus-interest consequence applies regardless of the underlying commercial reason for delay — there is no retrospective condonation simply because the delay was legitimate.

A return-filing-focused engagement typically treats each cross-border filing — LUT, GSTR-1/3B, a refund application — as a discrete task completed when submitted. PNPC's cross-border advisory starts one step earlier: testing whether the underlying transaction genuinely qualifies for the treatment being applied (export, SEZ zero-rating, or import credit) before any filing happens, and continues one step later: tracking the Rule 96A realisation clock, the ICEGATE-GSTN import reconciliation, and the DGFT incentive cross-reference across the year, not just at filing moments. The classification judgement and the ongoing monitoring are where the real risk sits — the filings themselves are mechanically straightforward.

Transaction mapping and classification testing for every export, import, and SEZ flow; LUT eligibility confirmation and filing coordination; export/SEZ invoice endorsement set-up; Rule 96A realisation tracking; FIRC/BRC coordination; monthly ICEGATE-GSTR-2B import credit reconciliation; periodic Rule 89(4) ITC refund preparation and filing; DGFT incentive (RoDTEP, drawback, Advance Authorisation, EPCG) cross-reference checks; departmental query and show-cause response drafting; and proactive re-review whenever the corporate structure or transaction pattern changes.

For clients with operations spanning India and the UAE — an Indian subsidiary billing a Dubai parent, an Indian exporter shipping to UAE buyers, an Indian entity importing from a UAE-based group company, or a UAE entity establishing Indian operations — PNPC coordinates the India-side GST/customs/DGFT compliance from our Chennai, Bangalore, and Hyderabad offices alongside our Dubai office, which handles the UAE-side VAT, Corporate Tax, and invoicing considerations. This means the cross-border classification question — is this genuinely an export, an SEZ supply, an import, or an intra-entity flow — is assessed by one team with visibility into both sides of the transaction.

There is no government fee for LUT filing (Form RFD-11) itself, and Bill of Entry processing fees for imports are set by Customs separately from GST. Professional fees for the classification review, structuring advisory, ongoing reconciliation, and departmental representation are agreed with PNPC in writing before the engagement begins, scoped to the complexity and volume of your cross-border activity.

The classification test and LUT mechanics are the same regardless of size, but a small, single-client exporter typically has the least internal bandwidth to track Rule 96A timelines and FIRC matching across a full year — and a missed deadline carries the same proportionate consequence (IGST plus 18% interest) irrespective of business size. For a genuinely small, single-relationship exporter, a lighter-touch engagement focused on classification confirmation, LUT filing, and periodic check-ins is often sufficient; a business with multiple export markets, SEZ sourcing, or regular imports benefits from the full ongoing advisory relationship.

Yes. For a new export-oriented business, PNPC advises on GST registration and LUT set-up from the first invoice, IEC registration coordination with DGFT, import classification and duty planning for raw materials or capital goods (including Advance Authorisation or EPCG eligibility where relevant), SEZ or bonded warehousing options if applicable to the business model, and the ongoing reconciliation and refund infrastructure needed from the outset — rather than retrofitting these after the business has already been operating with gaps in its documentation trail.