Special Economic Zone (SEZ) under GST
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What is SEZ in GST?
SEZ full form in GST is Special economic zone (SEZ). It is the area which is deemed as a foreign territory within the country border and is also a duty free region for the purpose of trade and tariff. In India, SEZ GST policy was first heralded in April 2000. How to identify SEZ GST number or how to check SEZ GST number as the SEZ act was formed in the year 2005. The SEZ in GST or SEZ GSTIN number act came into effect on the 10th February 2006 after getting over 700 suggestions on the drafted rules. At present, there is total 22 states India wherespecial economic zone under gst are notified and operational.
Generally, SEZs are duty-free and enjoys most of the tax benefits this is to promote the free flow of goods and services and also to attract the investments either from the local investors (Domestic investment) or from the foreign investors (Foreign direct investment) or both. Special economic zone (SEZ) can be sector specific too such as information and technology, biotechnology, logistics etc.
What Are the Objectives Of SEZ?
The prime objectives of SEZ GST number format are:
- To enhance the economic activity in India by providing duty free trade.
- To promote exports of goods and services.
- To generate and increase the employment opportunity in India.
- To attract domestic investment and foreign direct investment (FDI).
- To improve and develop the infrastructure facility in India.
State Wise Bifurcation Of SEZs
| State or Union Territory | Formally Approved | Decided to Grant Approvals | Notified | Exporting SEZs including Central Government + State Government or Private SEZs + notified SEZs under the SEZ Act, 2005 |
|---|---|---|---|---|
| Andhra Pradesh | 29 | 4 | 25 | 20 |
| Chandigarh | 2 | 0 | 2 | 2 |
| Chhattisgarh | 2 | 1 | 1 | 1 |
| Delhi | 2 | 0 | 0 | 0 |
| Goa | 7 | 0 | 3 | 0 |
| Gujarat | 28 | 4 | 24 | 19 |
| Haryana | 24 | 3 | 20 | 6 |
| Jharkhand | 1 | 0 | 1 | 0 |
| Karnataka | 62 | 0 | 51 | 26 |
| Kerala | 29 | 0 | 25 | 19 |
| Madhya Pradesh | 10 | 0 | 5 | 4 |
| Maharashtra | 57 | 11 | 50 | 28 |
| Manipur | 1 | 0 | 1 | 0 |
| Nagaland | 2 | 0 | 2 | 0 |
| Odisha | 7 | 0 | 5 | 4 |
| Puducherry | 1 | 1 | 0 | 0 |
| Punjab | 5 | 0 | 3 | 3 |
| Rajasthan | 9 | 1 | 8 | 4 |
| Tamil Nadu | 50 | 3 | 47 | 37 |
| Telangana | 64 | 0 | 57 | 30 |
| Uttar Pradesh | 24 | 1 | 21 | 12 |
| West Bengal | 7 | 2 | 5 | 7 |
| Total | 423 | 31 | 356 | 222 |
Export and Import Meaning For SEZ under GST
As special economic zones are deemed to be as a foreign territory so any movement of goods and services are treated as exports and imports.
Exports
- Meaning of exports in the context of SEZ is that
- Any transaction of goods and services took outside the special economic zone to outside India. Or,
- Any movement of goods or services from one unit to another in the same SEZ or to other units of different SEZ located in the same SEZ or another SEZ.
Imports
- Meaning of imports in the condition of SEZ is
- Any transaction of goods and services bought inside the special economic zone from a place located outside India. Or,
- Any transfer of goods and services from one unit of SEZ to another unit of SEZ located within the same SEZ or another SEZ.
SEZ Under GST
GST is the biggest economic reform in India and it provides multiple benefits to the companies located in the special economic zone. The benefits are:
- Any movement of goods or services to the unit of special economic zone comes under zero-rated supply.
- IGST shall be exempted for any transaction of goods and services to the SEZ (Notification no. 64/2017-customs)
Any supply or transfer from the special economic zone (SEZ) to the domestic tariff area (DTA) shall be deemed export to DTA. In such cases, the reverse charge is applicable where the recipient of the supply is liable to pay the tax.
Furthermore, the supplier transferring goods to SEZ can
- Supply either goods or service or both as the case may be under the letter of undertaking (LUT) or bond without paying the IGST and can also claim an input tax credit (ITC). Or,
- Transfer the goods and service on payment of IGST and then claim refunds on the taxes paid.
SEZ Under EWB
After the implementation of the e-way bill under the GST regime, every person-in-charge carrying goods and services exceeding the amount of 50,000 INR shall carry an e-way bill either a copy or mapped RFID. SEZ movements of goods and services shall be treated as a normal inter-state supply and if you think how to identify sez unit from gst number, so every SEZ unit in GST shall follow the same steps or procedures for the generation of the e-way bill.
For Instance (SEZ GST Number Example)
- ABC is a unit of Delhi's SEZ.
- X is the company situated in Mumbai which is receiving the goods amounting 90,000 INR from SEZ.
- Then XYZ is responsible for the generation of the e-way bill.
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Frequently Asked Questions
How to Identify SEZ GST Number?
Identifying a SEZ (Special Economic Zone) unit's GST number isn't inherently different from a regular GST number. Both follow the standard 15-digit format. However, SEZ units might have specific economic activities exempt from GST. It's advisable to consult with the SEZ unit directly or verify the nature of their business activity for a clearer picture of their GST applicability.
How to Identify SEZ Unit From GST Number?
The GST number itself won't directly tell you if a business is a SEZ unit. The 15-digit GST number format applies to all registered businesses. However, you can use these methods to identify a SEZ unit:
- Company Website or Public Information: Many SEZ units advertise their SEZ status on their website or business listings.
- Contact the Business: Reach out to the company directly and inquire about their SEZ status.
How to Check SEZ GST Number?
There's no direct way to verify a SEZ unit just by their GST number. The 15-digit GST format applies to all businesses. However, you can try these methods:
- Check the company website or public information for any mention of SEZ status.
- Contact the business directly and ask about their SEZ status.
What Is SEZ Taxpayer?
A SEZ taxpayer is a business unit operating within a Special Economic Zone (SEZ) in India. These zones offer special economic benefits like tax breaks and simpler regulations to attract businesses and boost exports. SEZ taxpayers benefit from these advantages while still being registered under the GST system, though their specific GST applicability might differ depending on their activities within the SEZ.
Is GST Applicable for SEZ Zone?
GST applicability for SEZ units is a bit nuanced:
- Supplies into SEZ: These are treated as exports and are exempt from GST.
- Supplies out of SEZ: When a SEZ unit supplies goods or services to the domestic market (outside the SEZ), regular GST applies.
What Is SEZ Supplies With Payment in GST?
In the GST regime, SEZ supplies with payment are a bit unconventional. Typically, supplies to SEZ units are zero-rated (considered exports and exempt from GST). However, there's an option for SEZ units to opt for payment of Integrated GST (IGST) on their purchases. This allows them to claim input tax credit (ITC) on GST paid for those purchases, potentially reducing their overall tax burden.
Is SEZ Exempted From GST?
SEZ units aren't entirely exempt from GST, but their GST applicability is different from regular businesses. Supplies into SEZ zones are treated as exports and are exempt from GST. However, supplies out of SEZ zones (to the domestic market) attract regular GST.
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