Sez supply

SEZ’s are considered to be located in a foreign territory and thus the transactions with SEZ’s can be classified as Exports and Imports.

Here, Export means:

• Taking goods or services out of India from a special economic zone by any mode of transport or
• Supply of goods or services from one unit/developer in the SEZ to another unit in the same SEZ or another SEZ.

Import means:

• Bringing goods or services into a special economic zone from a place located outside India, by any mode of transport or
• Receiving goods or services from one unit/developer in the SEZ by another unit/developer located in the same SEZ or another SEZ.

• Being in a SEZ can be advantageous to a certain extent when it comes to taxes. Any supply of goods or services or both to a Special Economic Zone developer/unit will be considered to be a zero-rated supply. That means these supplies attract Zero tax rate under GST. In other words, supplies into SEZ are exempt from GST and are considered as exports.

  Therefore, the suppliers supplying goods to SEZs can:

• Supply under bond or LUT without payment of IGST and claim credit of ITC; or
• Supply on payment of IGST and claim refund of taxes paid.

• When a SEZ supplies goods or services or both to any one, it will be considered to be a regular inter-state supply and will attract IGST. The exception to this is, when a SEZ supplies goods or services or both to a Domestic Tariff Area (DTA), this will be considered as an export to DTA (Which is exempt for the SEZ) and customs duties and other Import duties will be payable by the person receiving these supplies in DTA.