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SEZ is applicable for state legislature

CA.Madhu (Charted Accountant) (204 Points)

30 December 2010

Dear Friends,

Here i just want to know, Company in which am i working now is working for a customer who is in SEZ Zone, and getting exemptions for Excise and service Tax.

But here the question is if a specified place is declared as SEZ Zone under central act, can i get an exemption for state taxes also i.e VAT etc also.

One advocate who is familiar to me clarified that, a location which is declared as SEZ ZOne , under state acts will not get an exemption for the applicable taxes.

Please clarify me in this regard along with notification nos, circulars if any.

Regards,

madhu

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U S Sharma (glidor@gmail.com) (21056 Points)
Replied 31 December 2010

sales and services to SEZ is dependent on the exemption certificates issues by SEZ, once the SEZ is established they are given certain exemptions under existing rules of state and central taxes, and allowed to furnish specific bonds / exemptions certificates for procuring goods and services without taxes,

borderline between exemption available or not is not part of supplier but the receipent, if they are allowed to furnish declarations/ bonds/ exemption certificates, then vendor will not charge, otherwise taxes are charged as normal transactions.

vendor has to check only whether the bonds/declarations/exemption certificates are allowing them to issue sales/service invoices without tax or not, if valid then there is no hassle to part of vendor.