Impact Of E-Invoicing On SEZ, Exports And Deemed Exports

Prakash Matre
Prakash Matre at March 17, 2023

E-Invoicing is one of the latest announcements from the GST Council. This new invoicing system is going to be a game-changer as it focuses on ease of doing business and compliances . The eligibility of E-Invoicing has been discussed here. In this article, we will discuss specifically the various rules of e-Invoicing and its impact on SEZs’, Exports and Deemed Exports: We'll also know is e invoice mandatory for export, how to generate e invoice for export invoice, how to generate export e invoice, export e invoice service format, e invoice in case of export, e invoice applicable for export and much more.

SEZ, Exports and Deemed Exports - Meaning

SEZ stands for a Special Economic Zone. This is a separate area within the territorial boundaries of India notified by the Central Government as a duty-free territory and is deemed to be foreign territory for trade operations, duties and tariffs. Furthermore, EXPWP meaning in GST is Export with Payment. When the term SEZ is used, it can mean one of these two distinct entities:

  • SEZ Developer or
  • SEZ Unit.

An SEZ Developer is generally a private sector entity who is granted permission by the Central Government to set up an SEZ area to carry out various business activities (Eg., Mangalore SEZ Limited). An SEZ Unit is a business set up within the SEZ (Eg., Cardolite Specialty Chemicals India LLP). Export means the sale of goods or services or both outside India. Exports can be done without paying GST (using a bond) or by paying GST and claiming a refund later. The Government may notify certain supplies of goods as Deemed Exports. Here, the goods supplied do not leave India, and the payment for such supplies is received either in Indian rupees or in convertible foreign exchange if they are manufactured in India (Section 147 of CGST Act 2017). The Central Government has notified the following supplies as deemed exports through Notification No. 48-2017 Central Tax dated 18 October 2017:

  1. Supply of goods by a registered person against Advance Authorisation issued by Director General for Foreign Trade
  2. Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation (EPCG)
  3. Supply of goods by a registered person to Export Oriented Unit
  4. Supply of gold by a bank or Public Sector Undertaking specified in the notification No. 50/2017-Customs, dated 30 June 2017 (as amended) against Advance Authorisation.

Every exporter is required to register on the E-Invoicing portal - Invoice Registration Portal (IRP). At the time of registration on the IRP. as an exporter, the taxpayer has to select the type of exports (such as regular export, deemed export, supplies from SEZ unit or SEZ developer).


Applicability Of E-Invoicing

E-Invoicing applies to all B2B supplies made to registered persons. Supplies to SEZs (with/without payment of GST), E Invoicing for Exports (with/without payment of GST), Deemed Exports, by the notified class of taxpayers are also covered under e-Invoicing. As on today, e-Invoice for export applies to taxpayers having an annual turnover of over INR 500 crores. However, a recent notification expressly excludes SEZ units.

E-Invoice Schema - Additional Requirements

The Central Government notified the e-Invoicing Schema in Notification No. 60/2020 – Central Tax dated 30 July 2020. We have summarised some of the key fields related to SEZ, Exports and Deemed Exports:

Sr. No. * Description of the field Whether Mandatory or Optional Explanation in brief
1.2 Code for Supply Type Mandatory Fill in the code to identify the type of supply. B2B: Business to Business B2C: Business to Consumer SEZWP: To SEZ with Payment SEZWOP: To SEZ without Payment EXPWP: Export with Payment EXPWOP: Export without Payment DEXP: Deemed Export
5.3 Recipient’s GSTIN Mandatory Fill in the GSTIN of the Recipient, if available. In case of exports or if supplies are made to unregistered persons, fill in as URP (Unregistered Person)
5.9 Recipient PIN Code Optional Fill in the PIN code of the Recipient’s locality. However, in the case of export, Pin code need not be mentioned
5.10 Country Code of Export Optional Fill in the code of the country of export as per the EDI system. The list published and updated from time to time at https://www.icegate.gov.in
10.3 Port Code Optional In case of export/supply to SEZ, fill in the port code as per the Indian Customs EDI System (ICES), where applicable, at the time of reporting the e-invoice. Non-EDI Port Codes are also listed. The lists are published and updated from time to time at https://www.icegate.gov.in
10.4 Shipping Bill Number Optional In case of export/supply to SEZ, fill in the shipping bill number as per Indian Customs EDI System (ICES), if applicable, at the time of reporting e-invoice.
10.6 Export Duty Amount Optional Fill in the amount of Export Duty in INR in case of invoices for export
10.7 Supplier Can Opt Refund Optional In the case of deemed export supplies, this field is for mentioning whether the supplier can exercise the option of claiming refund or not.

*As stated in the notification

What Are The Benefits Of E-Invoicing?

The most significant benefit of e-Invoicing for taxpayers related to SEZs’, Exports and Deemed Exports is the automated refund of GST Input Tax Credit (ITC), and GST already paid on exports. The GST and ICEGATE systems are expected to share the information between them electronically, and this will result in lesser compliance. Claiming of refunds is currently one of the challenges faced by businesses.

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