Text
The text below is the section as served by the CBIC tax information portal on 22 September 2026, with the portal's own amendment footnote markers (shown as small numerals before a bracket) and its footnotes.[1] The Act as published in the Gazette of India is the legal source.
Section 16, verbatim (show)
Section 16
Section 16. Zero rated supply.-
(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 3[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].]
3[(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.]
1. Inserted vide s. 123(a) of the Finance Act, 2021 dated 28th March, 2021- Brought into force w.e.f. 01st October, 2023 vide Notification No. 27/2023-C.T., dated 31st July, 2023.
2. Substituted vide s. 123(b) of the Finance Act, 2021 dated 28th March, 2021- Brought into force w.e.f. 01st October, 2023 vide Notification No. 27/2023-C.T., dated 31st July, 2023; for:
"(3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:-
(a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or
(b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Actor the rules made thereunder."
3. Inserted by section 153 of The Finance Act (No. 2) Act, 2024 No. 15 of 2024 dated 16.08.2024.
16(1)Supplies within zero rating
supply of goods or services or both for authorised operations to a Special Economic Zone developer or a Special Economic Zone unit.Section 16(1)
Exports fall within the definition. Supplies to a Special Economic Zone developer or unit require the authorised-operations connection.
16(2)Credit subject to exclusions
Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax ActSection 16(2)
Credit for making zero rated supplies remains subject to CGST section 17(5). The enabling provision operates notwithstanding that the supply may be exempt.
Questions to answer on the file2 questions
Sub-section (3)
16(3)Refund without integrated tax payment
without payment of integrated tax, under bond or Letter of UndertakingSection 16(3)
A registered person must use the bond or Letter of Undertaking framework for this unutilised-credit refund route. CGST section 54, applicable rules and prescribed conditions, safeguards and procedure govern the claim. Sub-section (5) overrides this route for goods subjected to export duty.
Questions to answer on the file12 questions
16(3) provisoUnrealised goods sale proceeds
within thirty days after the expiry of the time limit prescribed under the Foreign Exchange Management Act, 1999Section 16(3) proviso
Non-realisation of goods sale proceeds triggers deposit of the refund received under sub-section (3), with applicable CGST section 50 interest. The period runs after expiry of the FEMA receipt limit and the deposit follows the prescribed manner.
Questions to answer on the file12 questions
16(4)Notified paid-tax refund routes
The Government may, on the recommendation of the CouncilSection 16(4)
The Government may notify a class of persons or a class of goods, services or both for payment of integrated tax followed by refund. Applicable conditions, safeguards, procedure and CGST section 54 govern these routes. Sub-section (5) overrides them for goods subjected to export duty.
16(5)Export-duty refund prohibition
Notwithstanding anything contained in sub-sections (3) and (4)Section 16(5)
Goods subjected to export duty attract the prohibition on both unutilised-credit refunds and refunds of integrated tax paid on zero rated supplies. This prohibition takes priority over the refund routes in sub-sections (3) and (4).
Questions to answer on the file3 questions
Other questions to answer on the file
Questions a reviewer answers from the engagement file, grouped by the part of the section they come from. They describe what the section asks; they do not decide it.
Zero-rated export supplies 16(1)(a)
Questions to answer on the file4 questions
Notified class of persons paid-tax refund 16(4)(i),16(5)
Questions to answer on the file13 questions
Notified class of supplies paid-tax refund 16(4)(ii),16(5)
Questions to answer on the file13 questions
Zero-rated authorised SEZ supplies 16(1)(b)
Questions to answer on the file3 questions
Frequently asked questions
Does zero rating remove blocked-credit restrictions?
Section 16(2) expressly subjects its credit rule to CGST section 17(5). The exempt character of a supply does not remove that restriction.
Section 16(2)
Does payment of integrated tax itself establish the refund route?
Sub-section (4) requires coverage by a Government notification specifying persons or supplies, with the applicable conditions, safeguards and procedure. CGST section 54 also governs the claim.
Section 16(4)
What restriction applies to zero rated goods carrying export duty?
Sub-section (5) prohibits both specified refund forms for those goods and overrides sub-sections (3) and (4).
Section 16(5)
Amendment history
The CBIC text carries 3 footnotes. The table gives each in the source's own terms. Effective dates are as the footnotes state them.[1]
| Note |
|---|
| 1 |
| 2 |
| 3 |
Relationship with other provisions
| Provision | Connection | Words that tie them |
|---|---|---|
| Section 16 of the CGST Act, 2017, Section 17 of the CGST Act, 2017, Section 49 of the CGST Act, 2017, Section 50 of the CGST Act, 2017, Section 54 of the CGST Act, 2017 | 16 credit and refund context read with Section 16 of the CGST Act, 2017; Section 17 of the CGST Act, 2017; Section 49 of the CGST Act, 2017; Section 50 of the CGST Act, 2017; Section 54 of the CGST Act, 2017 | 16(2) "credit of input tax"; "sub-section (5) of section 17"; 16(3) "section 54"; proviso "section 50" |
Circulars and notifications
Circulars and notifications in the CBIC repository that cite this section, newest first, by number, date and subject. A listing here does not say what an instrument decides; read the instrument.
Circulars (9)
| Number | Date | Subject |
|---|---|---|
| Circular No. 137/07/2020-GST | 13 April 2020 | Circular clarifying issues in respect of challenges faced by registered persons in implementation of provisions of GST issued - Reg |
| Circular No. 135/05/2020-GST | 31 March 2020 | Circular on Clarification on refund related issues - Reg |
| Circular No. 125/44/2019-GST | 18 November 2019 | Seeks to clarify the fully electronic refund process through FORM GST RFD-01 and single disbursement. amended by a later instrument |
| Circular No. 108/27/2019-GST | 18 July 2019 | which seeks to clarify issues regarding procedure to be followed in respect of goods sent / taken out of India for exhibition or on consignment basis for export promotion. |
| Circular No. 48/22/2018-GST | 14 June 2018 | Circulars clarifying miscellaneous issues related to SEZ and refund of unutilized ITC for job workers. |
| Circular No. 45/19/2018-GST | 30 May 2018 | Clarification on refund related issues. Rescinded vide Circular No. 125/44/2019 - GST dated 18.11.2019. rescinded by a later instrument |
| Circular No. 17/17/2017-GST | 15 November 2017 | Manual filing and processing of refund claims in respect of zero-rated supplies. Rescinded vide Circular No. 125/44/2019 - GST dated 18.11.2019. rescinded by a later instrument |
| Circular No. 2/01/2017-IGST | 27 September 2017 | Clarification on supply of satellite launch services by ANTRIX Corporation Ltd. |
| Circular No. 1/01/2017-Compensation Cess | 26 July 2017 | Seeks to provide clarification regarding applicability of section 16 of the IGST Act, 2017, relating to zero rated supply for the purpose of Compensation Cess on exports. |
Notifications (21)
| Number | Date | Subject |
|---|---|---|
| Notification No. 15/2025-Integrated Tax (Rate) | 17 September 2025 | Seeks to amend Notification No 8/2017- Integrated Tax (Rate), dated 28th June, 2017 to implement the recommendations of the 56th GST Council. made under this section |
| Notification No. 07/2024-Integrated Tax (Rate) | 8 October 2024 | Seeks to amend Notification No.8/2017-Integrated Tax (Rate) dated 28.06.2017 made under this section |
| Notification No. 05/2023-Integrated Tax | 26 October 2023 | Seeks to notify supplies and class of registered person eligible for refund under IGST Route made under this section |
| Notification No. 15/2023-Integrated Tax (Rate) | 19 October 2023 | Seeks to amend Notification No 8/2017- Integrated Tax (Rate) dated 28.06.2017. made under this section |
| Notification No. 11/2023-Integrated Tax (Rate) | 26 September 2023 | Seeks to amend notification No. 8/2017- Integrated Tax (Rate) dated 28.06.2017 to implement decisions of the 50th GST Council. made under this section |
| Notification No. 01/2023-Integrated Tax | 31 July 2023 | Seeks to notify all goods or services which may be exported on payment of integrated tax and on which the supplier of such goods or services may claim the refund of tax so paid. amended by a later instrument made under this section |
| Notification No. 06/2023-Integrated Tax (Rate) | 26 July 2023 | Seeks to amend notification No. 08/2017- Integrated Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 50th meeting held on 11.07.2023. made under this section |
| Notification No. 05/2023-Integrated Tax (Rate) | 9 May 2023 | Seeks to amend notification No. 08/2017- Integrated Tax (Rate) dated 28.06.2017 so as to to extend last date for exercise of option by GTA to pay GST under forward charge. made under this section |
| Notification No. 03/2022-Integrated Tax (Rate) | 13 July 2022 | Seeks to amend Notification No 8/2017- Integrated Tax (Rate) dated 28.06.2017 made under this section |
| Notification No. 22/2021-Integrated Tax (Rate) | 31 December 2021 | Seeks to supersede notification 15/2021- IT(R) dated 18.11.2021 and amend Notification No 8/2017- Integrated Tax (Rate) dated 28.06.2017. made under this section |
| Notification No. 15/2021-Integrated Tax (Rate) | 18 November 2021 | Seeks to amend Notification No 8/2017- Integrated Tax (Rate) dated 28.06.2017. superseded by a later instrument made under this section |
| Notification No. 06/2021-Integrated Tax (Rate) | 30 September 2021 | Seeks to amend notification No. 08/2017- Integrated Tax (Rate) so as to notify CGST rates of various services as recommended by GST Council in its 45th meeting held on 17.09.2021. made under this section |
| Notification No. 04/2021-Integrated Tax (Rate) | 14 June 2021 | Seeks to amend notification No. 08/2017- Integrated Tax (Rate) so as to notify GST rates of various services as recommended by GST Council in its 44th meeting held on 12.06.2021. made under this section |
| Notification No. 02/2021-Integrated Tax (Rate) | 2 June 2021 | Seeks to amend notification No. 06/2019- Integrated Tax (Rate) so as to give effect to the recommendations made by GST Council in its 43rd meeting held on 28.05.2021. made under this section |
| Notification No. 16/2020-Central Tax | 23 March 2020 | Seeks to make third amendment (2020) to CGST Rules. |
| Notification No. 19/2019-Integrated Tax (Rate) | 30 September 2019 | Seeks to amend notification No. 08/2017- Integrated Tax (Rate) so as to notify GST rates of various services as recommended by GST Council in its 37th meeting held on 20.09.2019. made under this section |
| Notification No. 09/2019-Integrated Tax (Rate) | 10 May 2019 | To amend notification No. 8/ 2017- Integrated Tax (Rate) so as to extend the last date for exercising the option by promoters to pay tax at the old rates of 12%/ 8% with ITC made under this section |
| Notification No. 03/2019-Integrated Tax (Rate) | 29 March 2019 | Seeks to amend notification No. 8/2017- Integrated Tax (Rate) so as to notify IGST rates of various services as recommended by Goods and Services Tax Council for real estate sector. made under this section |
| Notification No. 75/2017-Central Tax | 29 December 2017 | CGST (Fourteenth Amendment) Rules,2017 |
| Notification No. 10/2017-Central Tax | 28 June 2017 | Seeks to amend CGST Rules notification no 3/2017-Central Tax dt 19.06.2017 amended by a later instrument |
| Notification No. 09/2017-Integrated Tax (Rate) | 28 June 2017 | To notify the exemptions on supply of services under IGST Act rescinded by a later instrument |
See also
- Section 17 of the CGST Act, 2017: apportionment of credit and blocked credits
- Section 50 of the CGST Act, 2017: interest on delayed payment of tax
- Section 54 of the CGST Act, 2017: refund of tax
References
- Central Board of Indirect Taxes and Customs. "Section 16. Zero rated supply". Integrated Goods and Services Tax Act, 2017, CBIC tax information portal, with amendment footnotes 1 to 3. Retrieved 22 September 2026.
External links
- IGST Act, 2017, Section 16 on the CBIC tax information portal