GST Refund for SEZ Units in India

GST refund for SEZ units is the recovery of accumulated input tax credit or integrated tax paid on transactions that qualify as zero-rated supply under Section 16 of the IGST Act 2017 read with Section 26 of the SEZ Act 2005. The refund flows through Form GST RFD-01 on the GST portal and is filed either by the DTA supplier of goods or services or by the SEZ unit or developer that received them. Two parallel routes apply: zero-rated supply under a Letter of Undertaking with refund of accumulated ITC, or zero-rated supply on payment of IGST with refund of the tax paid.

Patron Accounting LLP has filed monthly SEZ refund cycles for IT/ITES, biotech, manufacturing, and service-sector SEZ units across Pune, Mumbai, Delhi, and Gurugram since the GST rollout on 1 July 2017. Our CA and CS team handles LUT renewals, specified-officer endorsement via DSPF, monthly RFD-01 cycles, Rule 89(2)(f) declarations, and RFD-06 follow-up.

Content is reviewed quarterly for accuracy.

The service applies to two distinct actors under the same zero-rated framework. The DTA supplier sells goods or services to a SEZ unit and recovers either accumulated ITC (under LUT) or IGST paid. The SEZ unit itself files refund where it has paid IGST that should have been zero-rated, or where it has accumulated ITC on its own export operations.

• DTA suppliers of goods or services to any SEZ unit or developer for authorised operations.
• SEZ units exporting finished goods or services and accumulating ITC on inputs and input services.
• SEZ developers procuring construction materials, plant, and services from DTA suppliers under Section 26 SEZ Act.
• IT and ITES SEZ units with high input service ITC (telecom, software licences, professional services).
• Biotech, pharma, and engineering SEZ units with high input goods ITC and capital-goods purchases.
• Free Trade Warehousing Zone (FTWZ) operators where the FTWZ is located within a notified SEZ.

Threshold and pre-condition: separate GSTIN registration is mandatory for the SEZ unit even if the same legal entity also operates in DTA in the same state, as required by Rule 8 of the CGST Rules 2017 read with the proviso to Section 25(2) of the CGST Act. If the unit has not yet registered, complete GST registration before the first inward or outward supply. The unit must also maintain LUT validity in Form GST RFD-11 for every financial year to avoid IGST cash outflow on outward supplies.

Keep the following documents ready before filing each RFD-01 cycle. Patron Accounting maintains a digital document vault per client to ensure nothing slips between refund cycles.

• Separate GSTIN certificate for the SEZ unit (or DTA-side GSTIN of the supplier).
• Letter of Approval from Development Commissioner with current validity.
• Active LUT acknowledgement in Form GST RFD-11 for the financial year.
• Tax invoice carrying SEZ declaration as required by Rule 46 CGST Rules.
• Specified-officer endorsement - SEZ Online goods entry or DSPF service approval.
• Bill of Entry or shipping bill where applicable.
• BRC or e-BRC for outbound exports from the SEZ realised within the FEMA window.
• Importer-Exporter Code certificate where the SEZ unit imports directly. New units can complete IEC registration before the first import.
• GSTR-1 (Table 6B for SEZ supplies) plus GSTR-3B (Table 3.1(b)) for the refund period.
• Rule 89(2)(f) declaration that the SEZ unit has not availed ITC of the tax paid.
• CA certificate in Annexure 2 of RFD-01 where the refund amount exceeds Rs 2 lakh.

All fees and charges listed are indicative only and do not constitute a binding offer. Final amounts may vary depending on the volume of work and the complexity involved.

Professional service charges for drafting, filing, and representation are separate from the statutory fees. The exact fee depends on the complexity of the case, disputed amount, and number of hearings required. Contact us for a detailed quote.

Get a free GST Refund for SEZ Units consultation - Call +91 945 945 6700 or WhatsApp us. No-obligation assessment.

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Outcome proof: A Bengaluru-based IT/ITES SEZ unit recovered Rs 5.7 crore across 14 monthly refund cycles between FY 2024-25 and FY 2025-26 through the LUT route, with provisional 90 percent refund hitting within 8 days each cycle. Total deficiency memos in 14 cycles - one (resolved within 5 days).

Trusted by Hyundai, Asian Paints, Bridgestone, and growing SEZ units across India. With offices in Pune, Mumbai, Delhi, and Gurugram, Patron Accounting serves businesses across India both in-person and remotely.

SEZ refund work rarely sits in isolation. Most SEZ units and DTA suppliers need adjacent compliance running in parallel:

• GST refund (general) - for refund types beyond SEZ such as inverted duty, deemed exports, or excess balance.
• GST returns for SEZ - monthly GSTR-1 (Table 6B) and GSTR-3B filing is the gateway to any SEZ refund.
• GST annual return filing - GSTR-9 reconciliation that ties together all monthly SEZ refunds.
• GST audit support - for SEZ units above the prescribed turnover threshold.
• IEC registration - Importer-Exporter Code is mandatory for direct imports by SEZ units.
• GSTAT appeal for exporters - when a SEZ refund order is rejected, appeal lies before the GST Appellate Tribunal.

Under Section 16 of the IGST Act 2017, supply of goods or services to a SEZ unit or developer for authorised operations is a zero-rated supply, with refund available either as IGST paid on outward supply or as accumulated ITC under LUT in line with Section 16(3). Section 16(1)(b) was amended by the Finance Act 2021 to add the qualifier 'for authorised operations', operationalised through Notification 1/2023-Integrated Tax dated 31 July 2023 with effect from 1 October 2023.

Section 26 of the SEZ Act 2005 grants SEZ units and developers exemption from any duties or taxes on goods or services procured from DTA for authorised operations. Rule 30 of the SEZ Rules 2006 prescribes the procedural framework for such procurement and the endorsement obligation. Rule 30(4) requires the specified officer to endorse the receipt of goods or services for authorised operations, which becomes documentary proof for the refund applicant.

Section 54 of the CGST Act 2017 read with Rule 89 of the CGST Rules 2017 prescribes the refund machinery, including the 2-year limitation period from the relevant date. The second proviso to Rule 89(1) names the supplier of goods (after admission to SEZ) and the supplier of services (with endorsement evidence) as the persons who file the refund. Rule 89(2)(e) prescribes the invoice statement and endorsement evidence to be enclosed; Rule 89(2)(f) prescribes the declaration that the SEZ unit has not availed ITC of the tax paid by the supplier.

Penalty exposure: refund rejection plus deficiency memo under Rule 90 where endorsement, declaration, or reconciliation is incomplete. Where IGST has wrongly been collected on a supply that should have been zero-rated, the supplier may be exposed to ITC reversal under Section 17 read with Rule 42, plus interest under Section 50 CGST Act. Recipient SEZ unit's failure to use procured goods or services for authorised operations may invite enforcement under Section 11 SEZ Act 2005 plus refund recovery under Section 73 or Section 74 CGST Act.

Government references: CBIC GST portal, indiacode.nic.in (IGST Act, CGST Act, SEZ Act), SEZ Online (NDML) DSPF portal, and GST portal SEZ refund user guide.

Three statutory clocks run together for every SEZ supply:

1. 2-year refund limitation under Section 54(1) of the CGST Act 2017, counted from the relevant date. Once the window closes, your accumulated ITC or IGST paid is gone.
2. Annual LUT validity under Rule 96A - every financial year. Miss the renewal and the next supply attracts upfront IGST, blocking working capital until the Section 54 route refund processes.
3. 45-day endorsement window under SEZ Rules 2006 read with the second proviso to Rule 89(1). Without specified-officer endorsement, the refund is liable to deficiency memo under Rule 90 and may be rejected outright.

Past these points, refund eligibility lapses or processing stalls indefinitely. Patron Accounting tracks all three clocks for every retainer client.

Get your SEZ refund cycle set up today - Call +91 945 945 6700 or WhatsApp us. Free 15-minute eligibility call.

GST refund for SEZ units is the difference between recovering working capital monthly and watching it pile up across quarters. Section 16 of the IGST Act, Section 26 of the SEZ Act 2005, and Rule 89 of the CGST Rules together set up a zero-rated framework that rewards meticulous reconciliation across GSTR-1 Table 6B, GSTR-3B Table 3.1(b), specified-officer endorsement, and the Rule 89(2)(f) declaration.

Patron Accounting LLP's CA and CS team handles the end-to-end SEZ refund stack - LUT renewal, DSPF coordination, monthly RFD-01 filing, and RFD-06 follow-up. With offices in Pune, Mumbai, Delhi, and Gurugram and a national client base of 10,000-plus businesses, we are equipped to manage refund cycles for SEZ units and DTA suppliers of every size from single-GSTIN operators to multi-zone enterprises.