Zero rated billing to main contractor who is supplie to sez

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 January 2019 Our Company got a project in SEZ area for construction of building under sub-contract basis. SEZ client awarded this contract to contractor "A". Subsequently Contractor "A" awarded this contract to us. We are billing to Contractor "A". Whether we are eligible for GST exemption while billing to Contractor "A" or We can take exemption after making payment to Govt. What are the documents for claiming exemption? Exemption is available to Sub-Contractor who is taking contract from main Contractor? Please Clarify

CA Anita Bhadra

CA Anita Bhadra (Expert)
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04 January 2019 As per Section 16 of the IGST Act, supply of goods or services or both to a Special Economic Zone Developer or a Unit are zero rated. However these provisions are silent about the sub-contractor supplying goods or services or both to the contractor..

However , In order to align the Special Economic Zone Rules, 2006 (SEZ Rules) with GST and to address specific issues of the industry and rationalise the provisions of SEZ Rules, a Committee was constituted in 2017 by Ministry of Commerce to review the SEZ Rules and make suitable recommendations.

The recommendations of the Committee were examined and notified as amendment by the Ministry of Commerce on 19 September 2018 in the form of Special Economic Zones (Amendment) Rules, 2018.

One of the recommendation is :- Benefit from duty/ taxes required for establishment of unit to be extended to sub-contractor as well currently, limited to contractors.

Querist : Anonymous

Querist : Anonymous (Querist)

05 January 2019 Thanks for the Reply .
One more question . we both work in SEZ site. Main contractor (A ) & we As Sub Contractor have LUT bond. we have raised the GST invoices as Zero Rated to Main contractor (A). Is it right or we have to invoices with GST tax .

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CA Anita Bhadra

CA Anita Bhadra (Expert)
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05 January 2019 In my view , you need to raise invoice with GST to main contractor as you are not supplying to SEZ but to main contractor

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Querist : Anonymous

Querist : Anonymous (Querist)

05 January 2019 But we have reaised ZERo Rated invoices . how we collected the previous invoices GST any idea

Querist : Anonymous

Querist : Anonymous (Querist)

05 January 2019 But we have reaised ZERo Rated invoices . how we collected the previous invoices GST any idea

SHUBHAM SHARMA

SHUBHAM SHARMA (Expert)
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07 January 2019 In my humble opinion, there is no as such relief under GST act for sub contractors, hence, you have to charge GST on the supplies made to main contractor who is working for SEZ unit.

Thanks and regards
CA Shubham Sharma
Contact-9462302922
email- shubham.vnv@gmail.com

CA Anita Bhadra

CA Anita Bhadra (Expert)
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07 January 2019 Agreed with CA Shubham Sharma

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Querist : Anonymous

Querist : Anonymous (Querist)

07 January 2019 Thanks you Shubam and Anita Mam