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:
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.
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:
- Supply of goods by a registered person against Advance Authorisation issued by Director General for Foreign Trade
- Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation (EPCG)
- Supply of goods by a registered person to Export Oriented Unit
- 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).
E-Invoicing applies to all B2B supplies made to registered persons. Supplies to SEZs (with/without payment of GST), Exports (with/without payment of GST), Deemed Exports, by the notified class of taxpayers are also covered under e-Invoicing. As on today, e-Invoicing applies to taxpayers having an annual turnover of over INR 500 crores. However, a recent notification expressly excludes SEZ units.
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
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
|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
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 the businesses.