Tax exemptions in SEZ Zone

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Querist : Anonymous

Querist : Anonymous (Querist)

29 March 2011 For the customer who is an SEZ Co- Developer and is entitled to exemptions in Custom Duty,Sales Tax,Service Tax,MVat etc, what documents should we ask from the customer for nil tax billings?

Also, for bought out items directly despatched to SEZ site, can we ask our Sub Vendors to bill with nil tax ?What do we have to do for this?

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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29 March 2011 https://www.caclubindia.com/share_files/files_download.asp?files_id=23721

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Querist : Anonymous

Querist : Anonymous (Querist)

05 April 2011 Thanks for the Reply but the second part of my query has not been addressed.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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26 July 2025 Good question! Dealing with tax exemptions in SEZ (Special Economic Zone) involves specific documentation and compliance to ensure that your billing is done without taxes legally.

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### 1. **Documents to Obtain from SEZ Co-Developer for Nil Tax Billing**

To support tax exemptions (Custom Duty, Sales Tax, Service Tax, MVAT) when billing an SEZ co-developer, you should obtain:

* **SEZ Unit/Developer Registration Certificate:** Issued by the Development Commissioner, confirming their status as an SEZ unit/developer.
* **Letter of Intent (LoI) or Approval Letter:** From the SEZ authority allowing the exemption.
* **Copy of SEZ Notification/Letter:** Supporting exemption eligibility.
* **Undertaking/Declaration:** From the customer stating that the goods/services are for SEZ operations and eligible for exemption.
* **Customs & Tax Exemption Certificate:** If applicable for specific duties or taxes.
* **GST Exemption Certificate or Relevant GST Notification:** If GST applies, showing zero-rated supply status.

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### 2. **For Bought Out Items Directly Dispatched to SEZ Site**

* **Can Sub Vendors Bill with Nil Tax?**

Yes, sub-vendors can issue nil tax invoices if the goods are directly supplied to an SEZ unit/developer and qualify for exemption.

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### 3. **What to Do for This?**

* **Sub Vendors must have SEZ Registration:** Vendors should ensure they are registered with the SEZ authorities and GST (if applicable).
* **Proper Documentation:** Vendors should obtain an authorization letter or declaration from you stating that goods are meant for SEZ supply.
* **Invoice Compliance:** Sub vendors must mention on invoices that the supply is for SEZ and taxable at nil rate as per relevant GST/Service Tax notifications.
* **Maintain Records:** Maintain proof of dispatch to SEZ, such as delivery challans, transport documents.
* **File Necessary Returns:** Ensure that you and the vendors comply with the filing and reporting requirements under SEZ laws.

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### 4. **References and Compliance**

* Check the **SEZ Act 2005** and the latest **GST laws** relating to SEZ supplies.
* Refer to **Central Board of Indirect Taxes and Customs (CBIC)** notifications on SEZ exemptions.
* Follow circulars from the **Development Commissioner** of the SEZ.

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If you want, I can help you draft a checklist or template for the documents to collect from customers and sub vendors. Would that be useful?

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