What payment rules apply to SEZ units exporting services and to their suppliers?

Special Economic Zones (SEZs) sit inside India but are treated as outside the domestic market for many tax purposes. That creates two different payment questions for service businesses: how an SEZ unit gets paid by clients abroad, and how a supplier outside the zone gets paid by an SEZ unit.¹⁵

This guide covers both, as of 28 October 2026. It is aimed at IT, design, analytics and back-office units in SEZs, and at the freelancers and firms who work for them. For the GST invoicing steps on supplies into an SEZ, see supplying services to an SEZ unit.¹

What are the SEZ export payment rules?

The SEZ export payment rules are the FEMA rules on EDF filing and realisation for an SEZ unit's exports abroad, the SEZ Rules on net foreign exchange, and the GST rules on supplies into and out of the zone.¹³⁵ An SEZ service business usually deals with three flows, each under different rules.¹⁵⁸

The table draws on the 2026 Regulations, regulation 5 as amended, and sections 2(6), 7(5) and 16 of the IGST Act.¹²⁵⁶⁸ The SEZ Act separately defines export to include providing services out of India from an SEZ, and from the rest of India to a unit.⁹

Who do the SEZ export payment rules apply to?

The SEZ export payment rules apply to SEZ units exporting services abroad and to suppliers in the rest of India billing those units, with different rules for each.¹⁵

Rule 8 of the CGST Rules requires a person with a unit in an SEZ to apply for a separate registration as a business vertical distinct from its units outside the zone.⁷

How does an SEZ unit report and realise its service exports?

An SEZ unit reports and realises its service exports under the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 (the 2026 Regulations), in force from 1 October 2026, like any other exporter, with one difference: the authority it reports to.¹

1. Check the export conditions: the unit's export to a client abroad is an export of services when all five conditions of section 2(6) of the IGST Act are met, including payment in convertible foreign exchange or rupees where the RBI permits.⁶
2. File the EDF with the Development Commissioner: regulation 2(f) names the Development Commissioner of the SEZ as the specified authority for services (and for software) exported from an SEZ; outside SEZs, it is usually the authorised dealer bank.¹ Every exporter of services gives an Export Declaration Form (EDF) to the specified authority within 30 days from the end of the month of invoicing; exporters of non-software services may instead file it on or before the date payment is received.¹
3. Track realisation: the full export value must be realised within nine months from the invoice date, or twelve months if invoiced or settled in Indian rupees.²
4. Ask for an extension if needed: under regulation 5, the Authorised Dealer may allow an extension of time for realisation, if satisfied with the reasons the exporter gives.¹²
5. Track net foreign exchange: cumulatively over five years under rule 53.³

Regulation 3(3) provides that where the specified authority for export of services is not an Authorised Dealer, as with an SEZ, the specified authority forwards the authenticated EDF to the Authorised Dealer.¹ See EDF for service exporters and export realisation period.

What is the timeline for SEZ export payments?

The timeline for SEZ export payments runs from the EDF within 30 days after the month of invoicing, through realisation within nine months, to the five-year NFE calculation.¹²³

How the EDF and extension process works in practice for SEZ service units in the first months of the 2026 Regulations is still settling.¹ Check the Development Commissioner's office procedure.

What is the net foreign exchange obligation for an SEZ unit?

The net foreign exchange (NFE) obligation for an SEZ unit is to achieve positive NFE, calculated cumulatively for five years, under rule 53 of the Special Economic Zones Rules, 2006.³

• Formula: rule 53 expresses this as A minus B greater than zero.³
• A: mainly the free-on-board value of exports.³
• B: mainly the cost, insurance and freight value of imported inputs and capital goods plus payments in foreign exchange such as commission, royalty, fees and dividends.³
• Period: the five years run from the commencement of production.³

The SEEPZ SEZ authority's FAQ describes it as a requirement that the total FOB value of exports exceed the CIF value of imports over a cumulative five-year period.⁴ Late or unrealised export receipts therefore matter twice for an SEZ unit: under FEMA and for its NFE.

Can an SEZ unit pay a supplier outside the zone in rupees?

An SEZ unit can pay a supplier outside the zone in rupees for GST purposes, because zero-rating of supplies to an SEZ unit under section 16(1)(b) of the IGST Act depends on the supply being for authorised operations and has no currency condition.⁵ An export of services abroad works differently: section 2(6)(iv) requires convertible foreign exchange or rupees where the RBI permits.⁶

• Refund proof: rule 89(2)(e) of the CGST Rules requires "the details of payment, along with the proof thereof, made by the recipient to the supplier for authorised operations" when the supplier claims a refund of input tax credit on services supplied to an SEZ unit.¹⁰
• Trainer example: for example, a Bengaluru freelance trainer runs workshops for staff of an analytics unit in an SEZ and is paid in rupees by bank transfer; the supply can be zero-rated if it is for authorised operations.⁵
• Design studio example: for example, a Chennai design studio builds product UI for an SEZ software unit and claims a refund of input tax credit; it attaches the specified officer's endorsement and the unit's payment proof.¹⁰

What happens if an SEZ unit's foreign client pays late?

If an SEZ unit's foreign client pays late, the unit should ask its authorised dealer (AD) bank for an extension before the nine-month period ends, because under regulation 5 it is the Authorised Dealer that may allow an extension of time for realisation.¹² The Development Commissioner and the bank both have roles. See extension of export realisation period.

Late receipts also weigh on the unit's NFE, which is calculated cumulatively over five years.³⁴

What are the common mistakes with SEZ export payment rules?

The common mistakes with SEZ export payment rules are filing the EDF with the wrong authority, asking the Development Commissioner for a realisation extension, and missing payment proof for supplier refunds.¹²¹⁰

• Wrong EDF authority: for services exported from an SEZ, the specified authority is the Development Commissioner.¹
• Wrong extension authority: under regulation 5, the AD bank is the authority that may allow a realisation extension.¹²
• No payment proof: suppliers claiming a refund need the unit's payment proof under rule 89(2)(e).¹⁰
• Ignoring NFE: late or unrealised receipts affect both FEMA compliance and NFE.³

Confirm complex cases, such as receipts through payment platforms or set-off against payables, with a chartered accountant.