Clarification - 'Zero rated Sales'

[Guest]

As per newly insterted Section 5A (W.E.F.1.4.2008)of Gujarat Value Added Tax Act, 2003, sale to Developer or Co-developer of SEZ shall be considered as 'Zero rated Sales' As i understood, from 1.4.2008 and onwards Developers/Co-developers can procure the material for their authorised operation without payment of GVAT. Confirm the view.

[Surender Gupta]

You need to contact local consultant.

[Guest]

As rightly pointed out by you, from 1.4.08, sale to developer/co-developer of SEZ is zero rated. i.e. dealers selling goods to developer/co-developer need not charge VAT for their sale, but they can avail input tax credit in respect of goods/inputs involved in manufacture of goods sold. However there are certain restrictions with regard to nature of asset (for eg vehicle not eligible) and nature of dealers eligible (composition dealer not liable) for effecting the zero rate sale.

AI Summary

Zero rated sales: supplies to SEZ developers/co-developers exempt from VAT and suppliers may claim input tax credit. Sale of goods to a Special Economic Zone developer or co-developer is treated as Zero rated Sales, so suppliers need not charge VAT and may claim input tax credit for goods/inputs used in those supplies, subject to exclusions for certain capital assets (for example vehicles) and ineligibility of composition scheme dealers.