SEZ goods may get CST waiver in DTA
While supply from DTA to SEZs is exempt from CST under the SEZ Act, a similar exemption is not provided to supplies from SEZ to DTA.
By Amiti Sen, TNN |
NEW DELHI: In a move that would make SEZ sales in the domestic market more competitive, the Centre is likely to exempt SEZ units from paying central sales tax (CST) on supply of goods to the domestic tariff area (DTA). While supply from DTA to SEZs is exempt from CST under the SEZ Act, a similar exemption is not provided to supplies from SEZ to DTA.
CST rates have been reduced to 3% from 4% this fiscal in line with the objective of phasing it out by 2010. However, an exemption at this point in time will help SEZ units in keeping the CST element out of their pricing consideration for the next three years.
Sources said the supplies from DTA to SEZs are treated as imports and hence all import duties are applied on the products. “Since SEZ supplies are being treated as imports as far as imposition of import duties is concerned, domestic taxes not applicable on imports should not be applied on such goods,” an official said.
When the commerce department had taken the issue up with the finance ministry, it had initially suggested that the matter should be discussed in the empowered committee of state finance ministers headed by Asim Dasgupta.
The commerce ministry, apparently, pointed out that there was no need for referring the issue to the committee as it was obvious that the decision to impose CST on SEZ supplies was an oversight on the part of policy framers which had to be corrected. “The finance ministry is more or less convinced about the point made by us. We hope to sort the issue out very soon,” an official said.
The SEZ Act allows units in the zones to sell as much as they want to in DTA provided their overall foreign exchange earnings is more than the foreign exchange spent by them. Units which do not import much have very low export obligations.
CST rates have been reduced to 3% from 4% this fiscal in line with the objective of phasing it out by 2010. However, an exemption at this point in time will help SEZ units in keeping the CST element out of their pricing consideration for the next three years.
Sources said the supplies from DTA to SEZs are treated as imports and hence all import duties are applied on the products. “Since SEZ supplies are being treated as imports as far as imposition of import duties is concerned, domestic taxes not applicable on imports should not be applied on such goods,” an official said.
When the commerce department had taken the issue up with the finance ministry, it had initially suggested that the matter should be discussed in the empowered committee of state finance ministers headed by Asim Dasgupta.
The commerce ministry, apparently, pointed out that there was no need for referring the issue to the committee as it was obvious that the decision to impose CST on SEZ supplies was an oversight on the part of policy framers which had to be corrected. “The finance ministry is more or less convinced about the point made by us. We hope to sort the issue out very soon,” an official said.
The SEZ Act allows units in the zones to sell as much as they want to in DTA provided their overall foreign exchange earnings is more than the foreign exchange spent by them. Units which do not import much have very low export obligations.
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