The Export Promotion Council for SEZ and EoUs has welcomed the GST Council's decision to treat supplies to special economic zones at par with exports.
Export Promotion Council for SEZ and EoUs (EPCES) said that earlier the supply of goods or services, to an SEZ developer and SEZ units were defined as 'zero rated supply' under IGST, and it mandated the developers and units receiving such supplies were required to take refund of the IGST.
The taxes were required to be paid at first place and then take refund, it said in a statement.
Exports from SEZs and export oriented units (EOUs) sector contributed about 33 per cent in the country's total shipments.
Paying the duties first and then seek refund would lead to hardship to the SEZ sector as their huge amount of working capital would have been locked for some period, EPCES Chairman Rahul Gupta said.
With regard of taxation of SEZ under the GST regime, the official said it would be "zero rated at par with exports".
"Now we will have the same treatment for any supply made to SEZ as it is made in case of exports. So zero rating will be the same," the official added.
Earlier it was stated that the SEZ players will first have to pay the tax and then the SEZ unit will get refund.
"Now it has been agreed that in case of physical export or anybody supplying goods to SEZ the same methodology applies. They can do it either under bond and not pay tax or they can pay IGST and take refund," the official added.