India permits SEZ units to sell domestically at reduced customs duty for one year
SEZ sales and compliance teams must verify reduced‑duty eligibility for DTA sales
Change
India allowed Special Economic Zone (SEZ) units to sell goods into the domestic tariff area at reduced Basic Customs Duty (and in some cases reduced Agriculture Infrastructure and Development Cess) from April 1, 2026 through March 31, 2027, provided goods have at least 20% value addition and DTA sales are capped at 30% of the unit's highest three‑year export value and Free Trade Warehousing Zones are excluded.
Why it matters
To qualify, SEZ units must ensure each DTA‑sold product was manufactured in the SEZ and records show a minimum 20% value addition. Domestic sales under the concession are limited to 30% of the unit's highest export value in the past three years and units will be subject to audits under SEZ rules. Units operating in Free Trade Warehousing Zones and excluded products such as petrol and diesel are outside the concession, and IGST relief is not provided.
Implications
- — Compliance teams at Special Economic Zone (SEZ) units must immediately document and certify that every domestic‑tariff‑area (DTA) sale meets the 20% minimum value‑addition test and that total DTA sales remain within the 30% cap of the unit's highest three‑year export value — failure will expose the unit to SEZ audits and loss of concessional duty treatment.
- — Operations and production teams at SEZ manufacturing units must confirm that affected product lines had production start dates by March 31, 2025 and meet the value‑addition threshold before routing output to the DTA — shipments that do not meet these conditions will not qualify for reduced duty treatment.
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Source
View on Economic Times