What is SEZ or Special Economic Zone?

A special economic zone (SEZ) could be a special space that enjoys a novel economic regulation compared to different regions of a similar country. SEZ is taken into account to be a remote territory.

These zones have easier tax and easier legal compliances creating it the foremost favourable space for foreign direct investment (FDI).

Therefore once you conduct business in SEZ, you’ll fancy several advantages like tax incentives, pay lower tariffs and labour laws, etc. Special tax holidays are offered to the operational units in SEZ.

The various objectives behind the implementation of SEZ are:

-To increase foreign trade by promoting the export of products and services

-Increase foreign investment within the country.

-Create a lot of domestic jobs for the individuals and increase the utilization rate.

-Improve effective administration and procedures for compliance.

-To improve infrastructural facilities within the country.

What is the impact on SEZ below the GST regime?

As per the GST, associate provide to or by associate degree SEZ developer /SEZ unit is an inter-state provide. it’s as a result of SEZ is taken into account to be foreign territory and it’ll attract GST.

It are often classified into two and that they square measure Export and Import:

Export below SEZ in GST

Transport of goods/services by any mode of transport from SEZ to outside Asian country.

Supply of products /services between one SEZ unit/developer to a different unit or same unit.

Import below SEZ in GST

Bringing product /services by associate, mode of transport into an SEZ from outside Asian country.

Receiving goods/services from one SEZ unit/developer by another unit/developer settled within the same SEZ or another SEZ.

Goods suppliers to SEZs will provide by the following:

  • Under bond / LUT while not paying IGST and claim ITC.
  • By IGST payment and claiming refund of taxes paid.


Integrated product and repair Tax (IGST) is applicable to the provision of goods/services from SEZ.

IGST exception once associate degree SEZ provides product /services to a Domestic Tariff space (DTA). So, it’s export to DTA (exempt for the SEZ). The person receiving these DTA provides is vulnerable to pay customs duties and different import duties.

Any provide of products /services to associate degree SEZ developer/unit contains a zero-rated provide ( id est, Zero charge per unit below GST). In short, provides into SEZ square measure exempted from GST and thought of as exports.

E-way Bill in SEZ below GST

Under GST, transporters want associate degree e-Way Bill for the transport of products from one place to a different and if the worth of the products is on top of Rs. 50,000.

SEZ provides square measure a similar as inter-state provides. So, SEZ units have to be compelled to follow a similar E-Way Bill procedures like that of inter-supply of products.

Note: If the provision of products from SEZ to a DTA or the other place, the registered one who will the movement of products has to generate the e-Way Bill.

An example to form it a lot of clear for you:

SEZ industries is associate degree SEZ unit settled in Kerala. Deepak settled at Kochi receives the SEZ factory-made product. the worth of transported product by SEZ industries is Rs. 60,000. So, this transport of products is associate degree Inter-state provide and therefore GST is applicable.

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