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

Inter State classification of SEZ transactions makes IGST applicable, while EOU treatment remains unsettled and domestic supplies are taxable. Supplies involving Special Economic Zones are treated as inter State trade or commerce under IGST, making IGST and place of supply rules applicable; Export Oriented Units are not explicitly covered, domestic supplies to EOUs are treated as normal supplies subject to GST based on place of supply, may be deemed exports but are not automatically zero rated like SEZ or export supplies, and imports by EOUs may attract IGST while basic customs duty is likely exempted.