Despatch to SEZ and EOU

[ASHOK AMIN]

Dear Experts,

What will be the procedure for EOU and SEZ transactions in GST ?

[DR.MARIAPPAN GOVINDARAJAN]

It will be treated as inter-State trade or commerce

[ASHOK AMIN]

Thanks for your prompt reply.

[Rajagopalan Ranganathan]

Sir,

According to Section 7 (5) (b) of IGST Act, 2017 " Supply of goods or services or both, to or by a Special Economic Zone developer or a Special Economic Zone unit shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce. However the Act does not speak about EOU. Necessary clarification in the connection is awaited.

[RadheyShyam Mangal]

EOU supply from domestic unit will be like normal supply and GST will be charged based on Place of supply. No exemption is intended on EOu supply. However it will qualify as deemed export but supply will not be zero rated like that of supply in course of exports or supply to SEZ. In case of import if inputs etc by EOu, BCD is likely exempted but IGSt will be charged .

AI Summary

Clarification on GST Treatment for SEZ and EOU Transactions: SEZs Are Inter-State; EOUs Await Specific Guidelines. A participant inquired about the procedure for Export Oriented Unit (EOU) and Special Economic Zone (SEZ) transactions under the Goods and Services Tax (GST). It was clarified that transactions involving SEZs are treated as inter-State trade or commerce according to the IGST Act, 2017, but the Act does not specifically address EOUs, and further clarification is awaited. Another expert noted that EOU supplies are treated as normal supplies with GST charged based on the place of supply, qualifying as deemed exports but not zero-rated like SEZ supplies. Import duties for EOUs may exempt Basic Customs Duty (BCD) but not Integrated GST (IGST).