The ITC rules for zero-rated supplies are as follows:
Claiming ITC: Registered taxpayers making zero-rated supplies can claim a refund of the GST paid on inputs, input services, and capital goods used in the course of making such supplies. The ITC can be claimed through the electronic refund application.
Export of goods or services: If the taxpayer exports goods or services, either with or without payment of IGST (Integrated GST), they can claim a refund of accumulated ITC. The refund can be claimed through a separate refund application, providing the necessary supporting documents.
Deemed exports: Supplies made under deemed export category, where the goods do not leave the country but are intended for specific purposes, are also eligible for zero-rated benefits. The supplier can either claim a refund of accumulated ITC or supply the goods without payment of GST by utilizing the ITC.
Bond/LUT requirement: To claim zero-rated benefits, exporters are required to furnish a bond or Letter of Undertaking (LUT) to the authorities, ensuring compliance with the export requirements. This eliminates the need for upfront payment of tax and facilitates the smooth flow of goods or services.
Timeframe for refund: The refund of accumulated ITC for zero-rated supplies must be processed within a specified time limit, usually 60 days from the date of filing the refund application. If the refund is not processed within the stipulated timeframe, interest may be applicable.
