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The government has allowed manufacturing units operating in Special Economic Zones (SEZs) to undertake domestic sales under a time-bound framework. Sources in the government says the notification a key budget announcement was announced to give relief to domestic industry.
According to the sources, the scheme is linked to the percentage of export turnover and also factors in the date of commencement of manufacturing activity within SEZs. It has been designed as a targeted, short-term intervention, with its applicability limited to one year. Officials emphasized that the core objective of SEZs is promoting exports and it remains unchanged, and there is no dilution of the SEZ framework. The move should be seen in the context of prevailing geopolitical tensions, with the scheme intended to provide a cushion to exporters and industry. Sources indicated that the scheme operationalizes the budget proposal while also ensuring a level playing field for domestic manufacturers. It has been structured as an exemption notification. To avail benefits, exporters will be required to submit a certificate from the Development Commissioner. Once certified, there will be no manual interface required in the process. The notification also clearly lays down the value addition formula. Food and petroleum products have been kept outside the ambit of the scheme. The exclusion is aimed at protecting sensitive domestic sectors, including agriculture, while petroleum products remain excluded due to their linkage with excise duties. The revenue impact of the scheme is currently difficult to quantify, and no formal assessment has been made so far. However, Input Tax Credit (ITC) will be available for IGST paid on domestic clearances. The one-year window will allow the Commerce Ministry time to design a more comprehensive framework to promote exports and consolidate various relaxations into a single scheme. Separately, the Central Board of Indirect Taxes and Customs (CBIC) has announced duty exemptions on several key raw materials. Based on past data, the duty reductions are expected to result in a revenue loss of approximately Rs 1,800 crore over a three-month period. On revenue collections, provisional data suggests that targets for customs and central excise have been met. However, collections under CGST and compensation cess are slightly below target. For the previous financial year, provisional figures indicate that customs collections reached 102 per cent of Revised Estimates (RE), central excise stood at 101 per cent, and CGST collections achieved 100.8 per cent of RE. Given the evolving global scenario, a detailed assessment of revenue trends for the current financial year will be undertaken, though it remains difficult at this stage to provide a precise outlook, says government source. (ANI)
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