What is the Meaning of Special Economic Zone Under GST?

  • Blog|GST & Customs|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 31 December, 2020
As per Section 2(19) of IGST Act, Special Economic Zone shall have the same meaning as assigned to it in clause (za) of Section 2 of the Special Economic Zones Act, 2005.
The specific clause (za) of Section 2 provides that “Special Economic Zone in GST” means each Special Economic Zone notified under the proviso to sub-section (4) of section 3 and sub-section (1) of section 4 (including Free Trade and Warehousing Zone) and includes an existing Special Economic Zone.
It is pertinent to refer clause (i) of Section 2 which defines that “Domestic Tariff Area” means the whole of India but does not include the areas of the Special Economic Zones.
Further, exports defined under Section 2(m) of SEZ Act as “Export” means-
a. Taking goods, or providing services, out of India, from a Special Economic Zone, by land, sea or air or by any other mode, whether physical or otherwise; or
b. Supplying goods, or providing services, from the Domestic Tariff Area to a Unit or Developer; or
c. Supplying goods, or providing services, from one Unit to another Unit or Developer, in the same or different Special Economic Zone.
It is settled that SEZ is an area considered to be situated outside India and any supply to SEZ is at par export and such supply attracts zero rate as zero rated supply.

SEZ Treatment Before GST:

Section 26 of the SEZ Act grants exemption, to every SEZ Unit and developer, from: • Any duty of customs under Customs Act, 1962 on goods or services imported into or exported from India, • Any duty of excise under Central Excise Act, 1944 • Service Tax under Finance Act, 1994 • Levy of taxes on sale and purchase of goods other than newspaper • The securities transaction tax leviable under Section 98 of the Finance act, 2004. Any transaction with or by SEZ Unit or SEZ Developer shall be exempted from any indirect tax law.

SEZ Under GST:

Under GST Law only for the purpose of levying GST, SEZ Units are not to be considered as a part of India which means:

a. IGST Exemption:


Any supply to SEZ Unit has been made exempt vide Notification No. 64/2017 – Customs dated 5th July, 2017.


b. Import: 


Any supply from SEZ Unit to DTA shall be treated as Imports and would be taxable under Reverse Charge Basis at the end of the recipient. Rest other thing it will be considered as part of India.

Therefore, suppliers of goods or services or both to any recipient in the SEZ can avail the following:
• Make supply under bond or LUT without payment of IGST and claim credit of ITC; or
• Make supply on payment of IGST and claim refund of taxes paid.
For detailed information on GST, buy GST books from our bookstore.
Related Articles:

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Comments are closed.

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied