The Finance Act of 2021 introduced a significant amendment concerning supplies made to Special Economic Zones (SEZ) units and SEZ developers. This amendment, which becomes effective on October 1, 2023, has substantial implications for businesses involved in such transactions. In this article, we will delve into the details of this amendment, exploring the conditions for zero-rated supply, the importance of endorsements, and the authorized operations specified under the SEZ Act of 2005.

Provision related to the Supply made to SEZ units / SEZ developer has been amended by Finance act 2021 and same is effective from 01.10.2023.

As per the amendment, supply of Goods / Service made to the SEZ units / developers will be considered as ZERO rated supply (No GST), only if, same are received for the authorized operation of Unit.

List of Inputs and Input services, which shall be considered for the authorized operation, is specified under SEZ Act 2005 and rules made thereunder.

Therefore, for suppliers one need to take precaution for supply made to SEZ units / SEZ Developer is to check whether the same is for authorized operation, and more important is to take the endorsement by Commissioner / Appropriate authority from SEZ unit/ developers.

SEZ Commissioner / appropriate authority gives the endorsement in following two mode

1) Physical.

2) Online.

Physical Mode:- here the stamp mentioning the Goods / Services are received for the authorized operation is mentioned along with seal & Signature Authority is mentioned on the invoice itself and this original endorsement is provided to the supplier.

Online mode:- Here, SEZ units file a form known as “SEZ-DTA Procurement form” filed with SEZ authority and after due verification, a certificate is issued by the authority. It is important to note that, since certificate is issued, invoice details of the supplier are necessary on the certificate e g Invoice No and Date, supplier GSTN, value of supply etc.

Recent Amendment

This endorsement (physical or online) is very much important for making supply without levy of  GST and also for claiming refund under GST.

As per F.No. D.12/19/2013-SEZ dated 02/01/2018 issued by Ministry of Commerce & Industry Department of Commerce (SEZ Section) issued list of default Authorized operations of SEZ units, same are as below,

Default List of Services approved by Department of Commerce

1. Airport Authority Services

2. Architect Services

3. Asset Management Services

4. Advertising agency services

5. Airport services

6. Banking and other financial services

7. Business Exhibition services

8. Cargo Handling services

9. Chartered Accountant Services

10. Cleaning Activity services

11. Clearing & forwarding agents services

12. Commercial or industrial construction services

13. Company secretary services

14. Computer network services

15. Consulting Engineer’s services

16. Cost accountant services

17. Courier services

18. Credit rating agency services

19. Custom house agent services

20. Commercial training & coaching services

21. Convention services

22. Copyright services

23. Design services

24. Development & supply of content services

25. Erection, commission and installation services

26. General insurance business services

27. Goods transport agency services

28. Information Technology Software Services

29. Interior decorator services

30. Internet communication services

31. Intellectual property services

32. Legal consultancy services

33. Management, maintenance or repair services

34. Manpower Recruitment and supply agency services

35. Market research agency services

36. Other Port services

37. Outdoor caterer services

38. Packaging activity services

39. Port services

40. Processing & clearing house services

41. Renting of Immovable property services

42. Security agency services

43. Site formation & clearance, excavation earth moving

44. Storage & warehousing services

45. Supply of tangible goods

46. Survey & map making services

47. Scientific or technical consultancy service

48. Sound recording studio or agency services

49. Technical inspection and certification

50. Technical Testing and Analysis services

51. Telecommunication services

52. Transport of goods by Air services

53. Transport of goods by Rail services

54. Transport of goods by Road services

55. Works contract services

56. Transport of goods services

57. Construction Services

58. On-line Information and database access services

59. Rent-a-cab Scheme Operator’s Services

60. SEZ Online Services

61. Air Travel Agent Services

62. Rail Travel Agent’s Services

63. Travel Agent’s Services

64. Business Support Service

65. Transport Passengers by Air

66. Accommodation service

However it is advisable to check the latest list for better compliance and avoid penal consequences.

Also Read: GST Zero Rating Benefit eligible on Employee Welfare Facilities in SEZs

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