Due to the fact that GST and the e-way bill will have an impact on everyone, SEZs are also included in the scope of the changes they bring. If your business is in SEZ or you want to set it up there, you must know about the GST Return Filing for SEZ Units. This article guides you about SEZ, GST Registration, and GST Return Filing for SEZ Units.
What are SEZ Units?
Special economic zones (SEZ) are designated areas where enterprises can benefit from simplified taxation and easy adherence to the law in order to operate more efficiently.
There are no SEZs outside of a country’s boundaries. Taxation, on the other hand, treats them as if they were a foreign country.
In other words, there are locations where the rules of the country are more lenient. This type of location is referred to as an SEZ.
So, in order to make it easier for goods or services to and from SEZs to be marketed, a distinct provision was made in the GST regime.
GST Registration for SEZ Units
If you’re in a special economic zone, you could benefit from lower taxes. Furthermore, supply of products or services, or both, to a developer/unit of a Special Economic Zone shall be deemed a zero-rated supplier.
This indicates that certain supplies are taxed at zero percent under the GST. To put it another way, supplies going into SEZs are free from GST and are thus deemed exports. Vendors providing products to SEZs can, thus,
- Supply under a bond or Letter of Undertaking without paying IGST and obtaining an ITC credit after GST Registration in India
- or Supply after paying IGST and claiming a refund of taxes.
What is GST Return Filing for SEZ Units?
Ideally, SEZ units do not have any GST, but in rare cases, they may have to pay GST against an invoice (including GST) generated by the ordinary taxpayer.
As a result, the manner in which GST is handled differs from situation to situation. In some circumstances, the GST money is collected from the SEZ unit/developer and subsequently refunded to the SEZ by GSTN.
Thus, in some cases, standard taxpayers pay GST and subsequently obtain a refund for the amount. However, taxpayers need to do GST Return Filing to obtain refunds.
What are the SEZ E-Way Bill Guidelines?
In order to move products worth more than Rs.50,000, transporters are required under GST to have an e-way bill with them at all times.
The same rules apply to SEZ supplies as they do to other interstate shipments.
The SEZ units or developers will be required to follow the same EWB practices as the rest of the business.
Furthermore, E-way Bills must be generated for supply from SEZ to DTA or wherever else. Learn more about E-Way bills through our guide at E-Waybill
Important Point of GST Return Filing for SEZ Units
An SEZ’s provision of goods or services to anybody is considered an ordinary interstate supply, and the IGST law applies.
Thus, When products or services are exported from an SEZ to a Domestic Tariff Area (DTA), the recipient will be liable to pay import taxes and other fees.
In conclusion, SEZs are classified as foreign territory for tax reasons even if they are located in countries that border the SEZs’ home countries. As a result of their classification as exports, goods going into Special Economic Zones are free from GST. However, if an SEZ provides products or services to anybody outside, it will be considered a normal supply across states and be subject to IGST. When an SEZ sends products or services to a Domestic Tariff Area (DTA), it is free from paying taxes, but the recipient in the DTA must pay these taxes.
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