Under the GST regime, supply of goods and services between Domestic Tariff Area (DTA) and Special Economic Zone (SEZ) units is treated as inter-state supply and is subject to specific regulations and provisions. There are two types of supplies that can take place between DTA and SEZ units:
1. When goods or services are supplied from a DTA to an SEZ unit, it is treated as an inter-state supply and is subject to Integrated Goods and Services Tax (IGST). The supplier can claim input tax credit (ITC) of the IGST paid on the supply, which can be used to offset the GST payable on other supplies made by the supplier. The SEZ unit, on the other hand, is treated as a zero-rated supply, and is entitled to claim a refund of the IGST paid on the supply.
2. When a supplier in the DTA supplies goods or services to an SEZ unit, they must issue a tax invoice and charge IGST on the supply. The SEZ unit is entitled to claim a refund of the IGST paid on the supply, subject to certain conditions. The conditions for claiming the refund of IGST paid on the supply from DTA to SEZ are:
a. The SEZ unit must be a registered person under GST and must have a valid GSTIN.
b. The SEZ unit must not be engaged in any exempt supplies under GST.
c. The SEZ unit must be using the goods or services for authorized operations in the SEZ.
The refund claim can be filed by the SEZ unit on a quarterly basis or on a monthly basis, as per their choice.
3. When goods or services are supplied from an SEZ unit to a DTA, it is also treated as an inter-state supply and is subject to IGST. However, in this case, the SEZ unit is not entitled to claim input tax credit of the IGST paid on the supply. The DTA recipient of the supply, on the other hand, is entitled to claim the ITC of the IGST paid on the supply, which can be used to offset the GST payable on other supplies made by the recipient.
4. When an SEZ unit supplies goods or services to a recipient in the DTA, they must also issue a tax invoice and charge IGST on the supply. However, the SEZ unit is not entitled to claim input tax credit of the IGST paid on the supply. The recipient of the supply in the DTA can claim the ITC of the IGST paid on the supply, subject to certain conditions. The conditions for claiming the ITC of the IGST paid on the supply from SEZ to DTA are:
a. The recipient of the supply in the DTA must be a registered person under GST and must have a valid GSTIN.
b. The recipient must be engaged in taxable supplies under GST.
c. The recipient must be using the goods or services received from the SEZ unit for business purposes.
The recipient of the supply in the DTA must declare the details of the supply in their GST return and claim the ITC accordingly.
It's worth noting that there are certain specific conditions and procedures that must be followed while making supplies between DTA and SEZ units under GST. These conditions and procedures are outlined in the GST laws and regulations, and businesses must comply with them to avoid any penalties or other legal consequences.
Here are some frequently asked questions (FAQs) about the supply from Domestic Tariff Area (DTA) to Special Economic Zone (SEZ) or SEZ to DTA under Goods and Services Tax (GST):
A: DTA stands for Domestic Tariff Area, which is a geographical territory of a country where goods are subject to customs duties and other import/export regulations. SEZ stands for Special Economic Zone, which is a designated geographical area within a country where the trade and economic laws are different from the rest of the country.
A: Supply from DTA to SEZ means the supply of goods or services from a supplier in the Domestic Tariff Area to a recipient in the Special Economic Zone. On the other hand, supply from SEZ to DTA means the supply of goods or services from a supplier in the Special Economic Zone to a recipient in the Domestic Tariff Area.
A: Supply from DTA to SEZ or SEZ to DTA is treated as an inter-state supply under GST.
A: No, GST is not applicable on the supply of goods or services from DTA to SEZ or SEZ to DTA. However, the transaction is subject to Integrated Goods and Services Tax (IGST) under GST, and the applicable IGST is to be paid by the recipient in the SEZ.
A: Yes, the recipient in the SEZ needs to file an application in Form A-1 to the jurisdictional Commissioner of Central Tax to claim exemption from GST on supply from DTA to SEZ or SEZ to DTA.
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