GST UPDATEZ ON 27-12-2024 by R.SRIVATSAN, IRS, NACIN, CHENNAI
The Free Trade Warehousing Zones FTWZ is considered as a special category of Special Economic Zone wherein the activities of trading, warehousing, labeling, packing, or re-packing without any processing are permitted.
As FTWZ is a form of SEZ, any supply to or from the FTWZ shall enjoy the same special status in the GST law as that of SEZ i.e. supply of goods from DTA to FTWZ will be considered as zero-rated supply as per Section 16 of the IGST Act,2017.
Supply of goods from FTWZ to DTA will be considered as import of goods in the hands of the DTA and accordingly, Customs duty along with the IGST will be discharged.
As per Entry No. 8(a) and 8(b) of Schedule III of CGST Act, 2017 the supply of warehoused goods before clearance for home consumption shall neither be considered as supply of goods nor supply of services.
However, ambiguity was around the goods stored in warehouses located inside a Special Economic Zone (SEZ) or Free Trade Warehousing Zone (FTWZ) as they are not covered in entry No. 8(a) or 8(b).
To bring uniformity in taxability of goods stored in warehouses located in SEZ and FTWZ with custom bonded warehouses the 55th GST Council has recommended to insert entry No. (aa) in Para 8 of Schedule III of CGST Act 2017.
As per entry No. Clause 8(aa) supply of goods from warehouses located in SEZ and FTWZ, before clearance of such goods for export or domestic tariff area, shall neither be considered as supply of goods nor supply of services.
Such Entry shall come into effect on a retrospective basis from 1st July, 2017.
Well…..
FTWZ plays a crucial role in boosting global trade efficiently, lowering costs and attracting foreign investment.
Despite their significant benefits, challenges related to regulatory compliance infrastructure and competition must be overcome to fully harness their potential. Given the significant potential for industries operating in FTWZs, it is crucial that the Government has brought this amendment that too on retrospective basis w.e.f. 01-07-2017 which will give further fill up for Exports.
Share this content: