Special Economic Zone (SEZ) Under GST

The Special Economic Zones (SEZs) scheme was conceived by the then Minister for Trade and Industry in India. The policy was announced at the time of the annual review of the EXIM Regulations with an effect of 1.4.2000. The basic concept is to establish zones free from import and export roles and regulations as sites where export growth can take place and provide operational stability for them. In this article, we will be looking at the Special Economic Zone (SEZ) Under GST – Goods Or Services Tax

For the purposes of commercial imports, customs taxes, and tariffs, the Special Economic Zone (SEZ) is a duty-free enclave clearly established and deemed to be a foreign jurisdiction. SEZs are located within a country’s sovereign borders and seek to improve the balance of trade, employment, increased spending, job creation, and good governance. During a 1999 visit to China’s Special Economic Zones, the Special Economic Zones (SEZs) System in India was conceived by the then Minister for Trade and Industry.

At the time of the annual review of the EXIM Legislation, the scheme was announced, with an effect of 1.4.2000. The basic theory is to define territories, free from both the functions and legislation of import and export control, as places where export growth can take place and make them organizationally scalable.

A Special Economic Zone (SEZ) under GST is specified in the Goods and Services Tax (GST) Act as follows:


  • Asset out in Section 2(19) of the IGST Act, the definition of a special economic zone is the same as that provided for in Section 2(za) of the Special Economic Zones Act, 2005.


  • ‘GST Special Economic Zone’ means any Special Economic Zone notified under subsection ( 4) of Section 3 and subsection (1) of Section 4 (including the Free Trade and Warehousing Zone) and covers an existing Special Economic Zone as specified in Section 2 of the relevant clause (za).
  • It is important to refer to Section 2(i), which notes that the ‘Domestic Tariff Area’ applies to the whole of India but does not include the Special Economic Zones regions.
  • In addition, exports listed under Section 2(m) of the SEZ Act as ‘Export’ mean:
  • Take goods or services by road, sea, or air from a particular economic region, or by some other way, physically or otherwise, out of India.
  • Supplying goods, providing a unit or founder with resources from the domestic tariff region
  • Supplying goods or services from one unit to another unit or supplier in the same or different Special Economic Region.

SEZ Special Economic Zone 


A Special Economic Zone (SEZ) is a region that is now deemed to be an international territory where trade takes place while under the jurisdiction of the Indian sub-continent. This also shows how the Government of India conducts enforcement and taxes for certain SEZ units or SEZ makers. In this way, it is viewed that the supply of goods or services to and from the so-called Special Economic Zones, or both, is different from the normal supply of goods or services, or both, in India.


Any supply of products or services to or from the SEZ Unit or SEZ Producer can also be stated to be considered as an inter-State supply and to be subject to the Integrated Goods and Services Tax (IGST) under the rules on Goods and Services Tax (GST).


It can be helpful to some degree when in an SEZ, especially in terms of taxes. One explanation is that a zero-rated provider would be identified for any delivery of products or services or both to an SEZ unit or maker. This means that zero tax rates under GST would be charged on those supplies. In other words, products carried into the SEZs are withdrawn by GST and are known as exports.


A standard inter-State supply will be named and IGST will then be collected, whether goods or services or both are provided to anyone from a Special Economic Region. However, the exception to this is that when the SEZ sells products or services, or both, to the Domestic Tariff Zone (DTA), this is known as an export to the DTA (which is excluded from the SEZ), and the customs duty and other import duties are paid by the person or corporation importing goods or services through the purchase of goods or services by the DTA.

Export of products and/or resources and import of them Clarified

An SEZ or Special Economic Zone, as we have learned from the above definitions, is essentially referred to as a region considered to be foreign territory, whereas such an area is originally situated within or near the boundaries of India. Consequently, because SEZs are deemed to be foreign territories, there have also been records of transactions with SEZs on the basis of exports and imports.


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