Zero rated supply

In force Act 13 of 2017 As on 25 Oct 2026

Act 13 of 2017 Ministry Finance Enacted 12 Apr 2017 Cited by 2 provisions Instruments 13

Commencement. 22nd June, 2017 (sections 1, 2, 3, 14, 20 and 22); 1st July, 2017 (sections 4 to 13, 16 to 19, 21, 23 to 25)

Section 16 of the Integrated Goods and Services Tax Act, 2017 deals with zero rated supply. "zero rated supply" means any of the following supplies of goods or services or both, namely:--- (a) export of goods or services or both; The Act was enacted on 12 Apr 2017.

(1) "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 ¹[for authorised operations] to a Special Economic Zone developer or a Special Economic Zone unit.
(2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply.
²[(3) A registered person making zero rated supply shall be eligible to claim refund of unutilised input tax credit on supply of goods or services or both, without payment of integrated tax, under bond or Letter of Undertaking, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder, subject to such conditions, safeguards and procedure as may be prescribed:
Provided that the registered person making zero rated supply of goods shall, in case of non-realisation of sale proceeds, be liable to deposit the refund so received under this sub-section along with the applicable interest under section 50 of the Central Goods and Services Tax Act within thirty days after the expiry of the time limit prescribed under the Foreign Exchange Management Act, 1999 (42 of 1999) for receipt of foreign exchange remittances, in such manner as may be prescribed.
(4) The Government may, on the recommendation of the Council, and subject to such conditions, safeguards and procedures, by notification, specify---
(i) a class of persons who may make zero rated supply on payment of integrated tax and claim refund of the tax so paid ³[in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder];
(ii) a class of goods or services ⁴[or both, on zero rated supply of which, the supplier may pay integrated tax and claim the refund of tax so paid, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder].]
⁵[(5) Notwithstanding anything contained in sub-sections (3) and (4), no refund of unutilised input tax credit on account of zero rated supply of goods or of integrated tax paid on account of zero rated supply of goods shall be allowed where such zero rated supply of goods are subjected to export duty.]
Section 16, The Integrated Goods and Services Tax Act, 2017 (Act 13 of 2017).

Cross-references

Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.

This section refers to

Referred to by 2

Related judgements & precedents

These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.

Union of India vs Willowood Chemicals Pvt. LTD

Supreme Court of India 19 Apr 2022 Binding (SC) Reportable

Court's Decision & Legal Precedent

Where a statute specifies or regulates the rate of interest on delayed refunds, the interest must be payable strictly in accordance with the statutory provisions. The principal provision of Section 56 of the CGST Act prescribes a maximum rate of 6% per annum for interest on delayed refunds in normal circumstances. The proviso to Section 56, which provides for 9% interest, applies only where the refund claim arises from an order passed by an adjudicating authority, appellate authority, appellate tribunal, or court. In cases where the refund claim does not arise from such an order, the interest rate is limited to 6% per annum, and courts cannot exceed this statutory rate even in cases of substantial delay, unless the delay is so inordinate (such as 12-17 years) as to warrant equitable compensation beyond the statutory prescription.

On this section: Establishes eligibility of registered persons making zero-rated supplies (exports) to claim refund of unutilized input tax credit or refund of integrated tax paid on export of goods

Read the full order on eCourts India
Union of India vs Saraf Natural Stone

Supreme Court of India 19 Apr 2022 Binding (SC) Reportable

Court's Decision & Legal Precedent

Where a statute specifies or regulates the rate of interest on delayed refunds, the interest must be payable strictly in terms of the statutory prescription. The principal provision of Section 56 of the CGST Act prescribes 6% per annum interest on delayed refunds not arising from court orders. The proviso prescribing 9% interest applies only when the refund claim arises from an order passed by an Adjudicating Authority, Appellate Authority, Appellate Tribunal, or Court. In the absence of special circumstances constituting inordinate delay comparable to 12-17 years (as in Sandvik Asia), the statutory rate prescribed in the principal provision must be applied, and courts cannot award interest at a higher rate on equitable grounds alone.

On this section: Establishes eligibility of registered persons making zero-rated supplies (exports) to claim refund of unutilized input tax credit or refund of integrated tax paid on exports

Read the full order on eCourts India

The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.

Made under this section, and citing it

12 instruments state that it was made under this provision — the power to make it comes from here, so a change to any of them changes what this section requires in practice. Newest first.

Another 1 instrument names this provision in its title or its text without being made under it.

Circular No. 2/1/2017-IGST dated 27.09.2017Circular 2017

All subordinate legislation

Questions about Section 16

What have the courts held on Section 16 of the Integrated Goods and Services Tax Act?

Union of India vs Willowood Chemicals Pvt. LTD (19 Apr 2022) is the leading judgment on this section among those set out below: Establishes eligibility of registered persons making zero-rated supplies (exports) to claim refund of unutilized input tax credit or refund of integrated tax paid on export of goods. Another 1 judgment on this section is set out below, all of them from the Supreme Court.

How do I find court cases under Section 16 of the Integrated Goods and Services Tax Act?

In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Integrated Goods and Services Tax Act 16, section 16 Integrated Goods and Services Tax Act, section 16 of the Integrated Goods and Services Tax Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 2 reported judgments on this section are set out on this page, beginning with Union of India vs Willowood Chemicals Pvt. LTD (19 Apr 2022).

What should I read with Section 16 of the Integrated Goods and Services Tax Act, and has it changed?

Its own text turns on Central Goods and Services Tax Act 17 (Apportionment of credit and blocked credits), Central Goods and Services Tax Act 50 (Interest on delayed payment of tax), Central Goods and Services Tax Act 54 (Refund of tax), so none of them can safely be read on its own. 2 other provisions in this corpus refer back to it. The rules and notifications made under it are where it actually bites, and there are 12: most recently Notification No. 03/2019- Integrated Tax (Rate) dated 29.03.2019 (2019), then Notification No. 09/2019- Integrated Tax (Rate) dated 10.05.2019 (2019), and 10 more.

When was Section 16 of the Integrated Goods and Services Tax Act enacted?

Section 16 of the Integrated Goods and Services Tax Act, cited as Integrated Goods and Services Tax Act 16, was enacted on 12 Apr 2017 as Act 13 of 2017. It is in force as at the date shown on this page.

Other sections of this Act

Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 25 Oct 2026. This page is not a substitute for legal advice.