Clause 114 of the Finance Bill 2021 seeks to amend section 16 of the Integrated Goods and Services Tax Act, 2017 so as to make provisions for restricting the zero rated supply on payment of integrated tax only to specified class of taxpayers or specified supplies of goods or services. It further provides to link the foreign exchange remittance in case of export of goods with refund and further restricting zero rating of supplies made to special economic zone only when such supplies are for authorised operations.
Section 16 of the IGST Act is being amended so as to:
(i) zero rate the supply of goods or services to a Special Economic Zone developer or a Special Economic Zone unit only when the said supply is for authorised operations;
(ii) restrict the zero-rated supply on payment of integrated tax only to a notified class of taxpayers or notified supplies of goods or services; and
(iii) link the foreign exchange remittance in case of export of goods with refund.
Only supplies to SEZ or developer of SEZ qualify as zero-rated, which are used for the authorised operations and restricted the zero-rated supply on payment of IGST only to a notified class of taxpayers or notified supplies of goods or services and link non realisation of export sales proceeds of goods exported liable for refund so received along with interest after expiry of prescribed time under Foreign Exchange Management Act, 1999.
Now notified class of taxpayer of goods/services eligible to export on payment of IGST and claiming refund unlike all persons u/r 96(10) and other option left to claim refund of the accumulated ITC u/s 54 of the CGST Act and Rules.