The union budget has extended the exemption from basic customs duty on the electricity supply by Special Economic Zones (SEZs) to domestic tariff area till March 2026.
The Finance Bill presented in Parliament on Tuesday also allowed the exemption from special additional duty (SAD) to sales of products by units in the SEZ to the domestic market to lapse. The exemption from SAD was given to SEZ units in 2005. This duty is imposed to equalise imports with local taxes and is capped at 4% and is imposed on goods that are not under Goods and Services Tax (GST) – liquor and petroleum. After GST, SAD was withdrawn on all other items. Refineries in SEZs would be impacted by the proposed change.
The SEZs and units within the zones have been provided exemption from compensation cess on imports. This exemption is from July 2017 when the GST was introduced and implements the decision taken in the 53rd GST council meeting held on June 22 this year.
The Finance Bill has also extended the exemption from basic custom duty till March 2026 on LPG received from the unit in SEZ and and returned by the DTA unit to the SEZ unit.