Special Economic Zone (SEZ) Under GST

The Special Economic Zone (SEZ) is a duty-free enclave that has been expressly defined and which is considered to be a foreign jurisdiction for the purposes of commercial purchases, customs duties, and tariffs. SEZs are situated within the territorial boundaries of a country and are targeted at increasing trade balance, employment, expanded spending, job growth, and productive administration. The Special Economic Zones (SEZs) Scheme in India was conceived by the then Minister for Trade and Industry during a visit to China's Special Economic Zones in 1999. The scheme was declared with effect from 1.4.2000 at the time of the annual review of EXIM Regulation. The basic concept is to set up zones as places where export production may take place free of all roles and regulations regulating imports and exports and to provide them with organizational flexibility.

The Special Economic Zones (SEZs) Scheme in India was conceived by the then Minister for Trade and Industry during a visit to China's Special Economic Zones in 1999. The scheme was declared with effect from 1.4.2000 at the time of the annual review of EXIM Regulation. The basic concept is to set up zones as places where export production may take place free of all roles and regulations regulating imports and exports and to provide them with organizational flexibility. In this article, we will be looking at the Special Economic Zone (SEZ) Under GST - Goods Or Services Tax.

A Special Economic Zone (SEZ) under GST is specified in the Goods and Services Tax (GST) Act as follows:

• As provided for in Section 2(19) of the IGST Act, the definition of the Special Economic Zone is the same as that given to it in Section 2(za) of the Special Economic Zones Act, 2005.

• The relevant provision (za) of Section 2 specifies that 'GST Special Economic Zone' means any Special Economic Zone notified under subsection (4) of Section 3 and subsection (1) of Section 4 (including the Free Trade and Warehousing Zone) and covers an existing Special Economic Zone.

• It is important to refer to Section 2(i), which specifies that the 'Domestic Tariff Area' applies to the whole of India but does not include the Special Economic Zones regions.
• In addition, exports specified as 'Export' under Section 2(m) of the SEZ Act mean:
• Taking goods, or supplying services, by road, sea or air or by some other mode, whether physical or otherwise, out of India, from a special economic zone; or
• Supplying goods, providing services to a unit or creator, from the domestic tariff area; or
• Supplying goods or services in the same or separate Special Economic Zone from one unit to another unit or creator.

SEZ Special Economic Zone 

A Special Economic Zone, or SEZ, is a region which, while situated within the jurisdiction of the Indian sub-continent, is still considered to be a foreign territory in which trade takes place. This also illustrates how the Government of India levies compliance and taxes on certain SEZ units or SEZ developers. In this sense, the supply of goods or services, or both, to and from the so-called Special Economic Zones is viewed differently from the normal supply of goods or services, or both, in India.

It should also be claimed that, under the Goods and Services Tax (GST) legislation, any supply of goods or services to, or from, the SEZ Unit or the SEZ Creator will be treated as an inter-State supply and will be liable to the IGST (Integrated Goods and Services Tax).

GST and SEZ

It can be beneficial to some degree when in an SEZ, especially in terms of taxes. One explanation is that a zero-rated supplier would be deemed to be any supply of products or services or both to an SEZ unit or developer. This means that zero tax rates under GST would be paid for those supplies. In other words, the supplies taken into the SEZs are excluded from GST and are known as exports.

If goods or services or both are provided to anyone from a Special Economic Region, it will be called a standard inter-State supply and will draw IGST as well. The exception to this, however, is that if the SEZ sells products or services or both to the Domestic Tariff Region (DTA), this shall be treated as an export to the DTA (which is excluded from the SEZ) and customs duty and other import duties shall be payable by the individual or business enterprise purchasing, or both receiving, the goods or services through the DTA.

Export of products and/or resources and import of them Clarified

An SEZ or Special Economic Zone is basically referred to as an area that is perceived to be international territory, as we have understood from the meanings given above, while such an area is originally located in or near the boundaries of India. Consequently, because SEZs are deemed to be international territories, transactions with SEZs have also been listed on the basis of exports and imports.