Supplying goods or services from the Domestic Tariff Area (DTA) to an SEZ unit constitutes a zero-rated supply under Section 16 of the IGST Act. While SEZ units themselves are exempt from generating e-invoices for their outward billing, regular DTA businesses supplying goods or services to SEZ units are fully covered by e-invoicing mandates once aggregate turnover exceeds prescribed statutory limits.
Legal mandate for e-invoicing on SEZ outward supplies
Under Rule 48(4) of the CGST Rules, notified classes of registered persons must prepare invoices by uploading schema details in FORM GST INV-01 to the Common GST Electronic Portal to obtain an IRN. Under Notification No. 10/2023-Central Tax, e-invoicing is compulsory for any registered person whose aggregate turnover in any preceding financial year from 2017-18 onwards exceeds Rs 5 crore. Under Notification No. 13/2020-Central Tax as amended, SEZ units are exempt from issuing e-invoices, but DTA suppliers delivering to SEZ units enjoy no such exemption.
Crucially, Rule 48(5) of the CGST Rules provides that every invoice issued by a person to whom Rule 48(4) applies in any manner other than obtaining an IRN shall not be treated as an invoice. A regular paper or ERP invoice without an IRN issued to an SEZ unit is legally void under GST law.
Common mistake: Treating supplies to SEZ units as regular domestic B2B transactions. If you upload an SEZ invoice using the standard B2B supply type instead of SEZWP or SEZWOP, the document will fail to auto-populate into Table 6B of GSTR-1 correctly, leading to delayed refund processing or endorsement discrepancies at the SEZ customs gate.
Choosing between SEZWP and SEZWOP supply types
The e-invoice JSON schema requires an exact value in the supply type field (`SupplyType`) under document details. For supplies to SEZ developers or units, the portal accepts two specific codes:
- SEZWP (SEZ with payment): Use this code when you supply goods or services to an SEZ unit on payment of integrated tax. The invoice must reflect full IGST at applicable rates.
- SEZWOP (SEZ without payment): Use this code when you supply goods or services without payment of integrated tax under a valid Letter of Undertaking (LUT) or bond under Section 16(3) of the IGST Act.
For zero-rated supplies without payment of tax under Section 16(3), refund of accumulated unutilised input tax credit is claimed under Rule 89(4) of the CGST Rules. Ensure that your LUT reference number and validity period are documented in your records prior to issuing invoices under SEZWOP.
Reporting steps on the invoice registration portal
- Validate recipient GSTIN: Enter the SEZ unit's 15-digit GSTIN. The portal validates whether the recipient GSTIN is designated as an SEZ unit or developer.
- Select document and supply type: Choose Tax Invoice (INV) as Document Type, and select either SEZWP or SEZWOP as Supply Type.
- Set tax rates and values: For SEZWP, apply IGST. Even if the supplier and the SEZ unit reside in the same State, supplies to SEZs are treated as inter-State supplies under Section 7(5)(b) of the IGST Act; CGST and SGST must not be charged. For SEZWOP, set tax amounts to zero.
- Generate IRN and QR code: Upload the JSON payload to the IRP. Upon successful validation, the portal returns the signed IRN, digital signature, and signed QR code.
- Verify GSTR-1 auto-population: Verified e-invoices auto-populate into Table 6B (Supplies made to SEZ unit or developer) of the supplier's Form GSTR-1 on the GST Common Portal per GSTN GSTR-1 guidelines.
Similar zero-rated and export operational principles apply when dealing with specialized export setups; see our detailed guide on GSTR-2B reconciliation for export oriented units.
Worked numerical example: SEZWP vs SEZWOP calculation
A manufacturing unit in Maharashtra (turnover Rs 12 crore) supplies technical components to an SEZ unit located inside SEEPZ, Mumbai. The contract value is Rs 5,00,000, and the standard IGST rate is 18%.
| Particulars | Option A: With payment (SEZWP) | Option B: Without payment (SEZWOP) |
|---|---|---|
| Supply type selected on IRP | SEZWP | SEZWOP |
| Taxable value | ₹5,00,000 | ₹5,00,000 |
| Applicable IGST rate | 18% | 0% (under LUT) |
| IGST charged on invoice | ₹90,000 | ₹0 |
| Total invoice value | ₹5,90,000 | ₹5,00,000 |
| GSTR-1 auto-population destination | Table 6B (SEZWP) | Table 6B (SEZWOP) |
| Supplier refund mechanism | Refund of paid IGST (₹90,000) | Refund of unutilised ITC under Rule 89(4) |
Under Option A, the IGST of Rs 90,000 is calculated as:
IGST = Taxable value x Rate = Rs 5,00,000 x 18% = Rs 90,000
Credit utilisation for paying the IGST liability must adhere strictly to Section 49A of the CGST Act and Rule 88A, utilizing existing IGST credit balances before exhausting CGST or SGST balances.
Common IRP errors during SEZ e-invoice generation
When reporting SEZ documents on the NIC e-Invoice System, common technical validation errors occur due to master data mismatches:
- Recipient GSTIN state code mismatch: Error 2265 occurs when the first two digits of the recipient GSTIN do not match the state code passed in the recipient details block. Ensure recipient state matches the GSTIN master record.
- Duplicate IRN generation attempt: Error 2150 occurs if you attempt to re-register an invoice for which an IRN has already been generated. Once generated, an IRN cannot be edited; it can only be cancelled within 24 hours, after which the same invoice number cannot be re-used per Error 2278.
- Inactive or invalid SEZ registration: Error 3029 triggers when the recipient GSTIN is inactive or cancelled on the GST Common Portal. Verify status using the portal search tool before submission.
Frequently asked questions
Is e-invoicing mandatory for supplies made to SEZ units?
Yes. If your aggregate turnover in any preceding financial year from 2017-18 onwards exceeds Rs 5 crore under Notification No. 10/2023-Central Tax, generating an IRN under Rule 48(4) is mandatory for supplies to SEZ units or SEZ developers.
What supply type codes should be selected on the IRP for SEZ supplies?
Use SEZWP for supplies to SEZ units or developers made with payment of integrated tax. Use SEZWOP for supplies made without payment of tax under bond or Letter of Undertaking (LUT).
Can an invoice issued without an IRN to an SEZ unit be treated as a valid tax document?
No. Under Rule 48(5) of the CGST Rules, any invoice issued by a taxpayer mandated to follow Rule 48(4) without obtaining an IRN is not treated as a valid legal invoice.
Check your outward GSTR-1 and GSTR-2B consistency
Reconciling inward and outward tax registers prevents ITC misalignments and e-invoice reporting mismatches. Your GSTR-2B and purchase register files are read in your browser and never uploaded to any server.
Last checked: 23 October 2026. Sources: CBIC CGST Rule 48, CBIC IGST Act Section 16, NIC e-Invoice Portal FAQs, GSTN GSTR-1 User Manual.