GST compliance for Special Economic Zone (SEZ) units in India is a critical aspect that SEZ developers and units need to adhere to under the Goods and Services Tax (GST) regime. SEZs are designated areas in India that are considered to be outside the customs territory of India, where special incentives and tax benefits are provided to promote exports and boost economic activities.
Here are the key points to understand about GST compliance for SEZ units in India:
1. Supplies to SEZ Units Treated as Zero-Rated:
Supplies of goods or services to SEZ units are treated as zero-rated supplies under GST. This means that such supplies are taxable at a 0% GST rate, and the suppliers can claim a refund of the GST paid on inputs used to make those supplies.
2. Import of Goods and Services by SEZ Units:
3. Duty-Free Procurement of Goods and Services:
SEZ units are allowed to procure goods and services from the DTA without payment of IGST or compensation cess. However, they need to follow the prescribed procedure for claiming exemptions.
4. E-Way Bill Requirements for Supply to SEZ Units:
For the movement of goods from the DTA to SEZ units, an e-way bill is required as per the normal e-way bill rules.
SEZ units are eligible to claim Input Tax Credit (ITC) on the GST paid on their domestic procurement of goods and services for their authorized operations. However, ITC cannot be claimed on goods and services used for non-business purposes.
6. Maintenance of Records and Accounts:
SEZ units need to maintain proper records and accounts of their transactions, including invoices, purchase registers, and other relevant documents, to ensure compliance with GST regulations.
7. Zero-GST Return Filing for SEZ Units:
SEZ units need to file a 'NIL' GST return (GSTR-3B) even if there are no transactions during a specific tax period.
8. Bond or Letter of Undertaking (LUT) for Export of Goods and Services:
For exporting goods or services from SEZs to the DTA or outside India, SEZ units need to furnish a Bond or LUT to avail of zero-rated supplies.
9. GST Refund for SEZ Units:
SEZ units can claim a refund of GST paid on goods and services procured domestically, subject to compliance with the prescribed procedures.
10. Compliance with SEZ Rules and Regulations:
In addition to GST compliance, SEZ units must also adhere to other SEZ-related regulations, customs laws, and export-import procedures.
Proper GST compliance for SEZ units is essential to avail the benefits of zero-rated supplies, claim GST refunds, and ensure smooth operations within the SEZ. SEZ developers and units should be well-informed about the GST rules and regulations specific to SEZs and maintain meticulous records to meet compliance requirements effectively. Seeking advice from qualified tax professionals or Chartered Accountants can further assist in understanding and ensuring compliance with GST provisions for SEZ units in India.