Finance Bill, 2021 vis-a-vis Zero Rated Supplies and Refunds under GST
Bhuwan Prakash
The Finance Bill, 2021 has proposed various amendments in the provisions relating to determination of zero rated supplies and refund of integrated tax in respect of zero rated supply. The present write-up aims at discussing the implications of the amendments.
1. Amendment in definition of zero rated supply
(i) Existing provision
The term zero rated supply is defined under sub-section (1) of section 16 of the Integrated Goods and Services Tax Act, 2017 (in short "the IGST Act") as under :--
zero rated supply means any of the following supplies of goods or services or both, namely :--
(a) export of goods or services or both; or
(b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.
As per the above definition, all types of supplies of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit is regarded as zero rated supply. There is no condition that such supply of goods or services or both must be for authorised operations of a Special Economic Zone developer or a Special Economic Zone unit.
(ii) Amended Provision
The Finance Bill, 2021 proposes to amend sub-section (1) of section 16 so as to provide that in sub-section (1), in clause (b), after the words supply of goods or services or both, the words for authorised operations shall be inserted.
With the above amendment coming into force, the new definition of "zero rated supply" would read as under :--
zero rated supply means any of the following supplies of goods or services or both, namely :--