A SEZ is required to follow two separate set of compliances. Firstly compliances governed by the SEZ Act, 2005, such as submission of periodical progress reports and secondly, compliances required to be undertaken in terms of indirect tax laws. While the former are likely to continue without any major changes, the latter would now be modified in line with the GST law. Till now GST regime has been a mixed bag for SEZ sector. On one hand, under GST regime, registration rules have mandated SEZ to take separate registration, since it is considered as a separate business vertical. Apparently, this will result into increased compliance and record maintenance burden on sectors having multiple SEZ units. On the other hand, industry has welcomed GST lawmaker’s decision to keep all the supplies made to a SEZ as “zero rated”. In relation to the EOUs, all imports and domestic procurements are duty free. Under GST regime also it has been clarified that EOUs are allowed to import goods for the authorized operations without paying BCD. But such goods would suffer IGST and applicable cesses. In respect of indigenous procurements, the taxes so paid will be available as input tax credit (ITC) to EOUs and refund of the same can be claimed after exports.

(Economic Times)