As per the IGST Law, supplies of goods and services to or by Special Economic Zone (SEZ) units or SEZ developers will be treated as inter-State supplies. As per the SEZ Act, supply of goods from SEZs are treated as import of goods into India. Accordingly Basic Customs Duty (BCD) & Integrated GST will be levied on such supplies from SEZ units and SEZ developers into DTA.

Supplies of goods and/or services to SEZ units or SEZ developers are to be treated as “zero rated supplies” and the SEZ developer or SEZ unit receiving such zero rated supplies will be given similar treatment as exports (please refer next question for details).

Draft Registration Rules make it mandatory for a SEZ unit or SEZ developer to obtain separate registration as a business vertical distinct from its other units located outside the SEZ.

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One response to “GST: Treatment of supplies to and by SEZ units/SEZ developers”

  1. H.R. Sreepada, Cost Accountant says:

    Supplies by a DTA Unit to SEZ Unit or SEZ Developer are treated as Exports. Such supplies are covered under IGST Act. Both Exports & supplies to a SEZ unit or SEZ Developer attract Zero % IGST. Supplies by SEZ unit to a DTA unit are are treated as imports by DTA unit and IGST is applicable. DTA unit is eligible to take ITC of IGST so charged. However BCD will be charged as applicable today, which is not an eligible ITC by the DTA unit.

    Supplies to EOU units are taxable supplies and attract CGST & SGST or SGST depending up on the place of supply. The EOU unit receiving the supply of goods or services is eligible for ITC & can apply for refund claim. However more specific clarifications are awaited.

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