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SPECIAL ECONOMIC ZONES UNDER GST

Goods and Services Tax - GST - By: - Dr. Sanjiv Agarwal - Dated:- 7-9-2017 Last Replied Date:- 8-9-2017 - Meaning of SEZ Special Economic Zones are specially delineated areas that are treated as foreign territories in the context of trade and tariff laws. A Special Economic Zone (SEZ) is a specified duty-free zone deemed to be a foreign territory within the country for the purpose of tariff and trade. The objectives of SEZ include promotion of goods and services leading to enhanced economic acti .....

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ution tax, securities transaction tax, minimum alternate tax etc. In CCE, Thane-I v. Tiger Steel Engineering (I) Pvt Ltd 2010 (7) TMI 324 - CESTAT, MUMBAI , it was observed that SEZ Act, 2005 deems supplies from DTA to SEZ unit or developer as exports and deeming provisions are meant exclusively for the benefit of SEZ units. DTA units can not claim any complementary benefit based on deeming provision of SEZ Act or Rules by mere supply of goods to SEZ units. It was held that SEZ Act, 2005 is a sp .....

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n incentive of setting up a unit in an SEZ is the relaxation in normally cumbersome procedure and much convoluted tax laws. Registration GST law is silent about separate registration of SEZ unit located in SEZ. Accordingly, SEZ unit will have to take registration under GST for either principal place of business or additional place of business. Rule 8 of the CGST Rule, 2017 require each unit in a Special Economic Zone (SEZ) to seek a separate registration under the new tax regime, for each of the .....

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in India and the place of supply is outside India and to or by a SEZ developer or a SEZ unit shall be deemed to be a supply of goods and/or services in the course of inter-State trade or commerce. SEZ Benefits and Incentives The SEZ scheme was introduced in 2000, as an improved version of the earlier Free Trade Zone (FTZ) and Export Processing Zone (EPZ) schemes. Special legal dispensations by way of the SEZ Act, 2005, and SEZ Rules, 2006, were put in place with great hopes of facilitating crea .....

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er the erstwhile tax regime, imports by SEZs were not charged excise duty and central sales tax (a levy on inter-State transactions). However, some States levy value added tax. SEZs are governed by the Special Economic Zones Act, 2005. Sections 26(c), 26(e) and 26(g) of the SEZ Act, 2005, provides exemption from earlier indirect taxes to SEZ units or Developers. Section 26(c) deals with exemption from any excise duty on goods brought from the domestic market to an SEZ to carry out authorized ope .....

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rt of goods and/or services, or (b) supply of goods and/or services to a SEZ developer or an SEZ unit. Accordingly, (a) Export of goods and/or services shall be considered as zero-rated supply under GST. What shall be considered as export of goods/services, is defined under section 2(5)-Export of goods and under section 2(6) Export of services of IGST Act, 2017 As per section 2(5) of IGST law, export of goods means taking goods out of India to a place outside India. Therefore, to be called as ex .....

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establishments of a distinct person in accordance with section 25(4) of the CGST Act, 2017. As per section 25(4) of the CGST Act, 2017, a person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act. Therefore, to be called as export of service, above mentioned conditions needs to be satisfied. .....

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pay GST at the prescribed rates. This can be understood by the given below Table: Situation Unit in SEZ DTA Nature of Supply GST Payable A By To Normal supply Yes B To By Zero rated supply No Exemptions under GST As per GST law, no exemptions including utilization of duty credit scrips (MEIS/SEIS) have been specified for exporters or EOUs and SEZ units or Developer. Upfront exemption from customs duty/ excise duty for exporters or EOUs and SEZ units or Developer (including service tax and CST e .....

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