Special Economic Zone (SEZ) is a dedicated economic zone within the country with simpler tax and easier legal compliances.
An SEZ however located within the country is considered a foreign territory.
Transactions with SEZs are considered as exports and imports as if they were any other foreign entity.
If any goods or services are supplied within the SEZ or from an SEZ to any other entity, it is considered to be interstate supply and IGST is applicable.
However, if any goods or services are supplied to SEZ, it will be considered as a zero-rated supply. Hence, making any supplies into SEZ exempt from GST.
These supplies will be treated as exports.
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