Gujarat AAR: SEZs May Dodge IGST on Specified Services

26 Apr 2024 CW Team

The ruling, which sets a potential precedent, states that SEZ units could potentially sidestep the IGST obligation on designated services if they furnish a letter of undertaking (LUT) or a bond as specified by the government.

This decision comes in the wake of a case involving Waaree Energies Ltd, a Surat-based SEZ unit engaged in solar module manufacturing, which sought clarification on the procurement of services.

Under normal circumstances, service providers are liable to pay Goods and Services Tax (GST) to the government. However, under the reverse charge mechanism, it is the recipient of services who bears this responsibility.

The AAR ruling addresses a longstanding ambiguity highlighted by the Tax Research Unit (TRU) at the Central Board of Indirect Taxes and Customs (CBIC). While a clarification by the TRU previously indicated that SEZ units can avail services subject to GST under the reverse charge mechanism without IGST payment upon furnishing an LUT, the AAR ruling now substantiates this stance.

Sandeep Sehgal, a partner at tax and consulting firm AKM Global, emphasized the significance of this ruling for SEZ-based businesses. "It aligns with the zero-rated intent of the GST Act as clarified by the TRU, allowing SEZ units to source services without the burden of Reverse Charge Mechanism (RCM)," he stated. "This ruling not only eases compliance for SEZ-based businesses but also fosters a more conducive environment for growth and investment in SEZs."

With this ruling potentially setting a precedent, it could pave the way for smoother operations and reduced tax liabilities for businesses within SEZs, further bolstering India's economic landscape.

In a significant development, the Gujarat-based Authority for Advance Rulings (AAR) has delivered a ruling that might offer relief to units operating within special economic zones (SEZs) from paying the integrated goods and services tax (IGST) on specific services procured from the domestic tariff area (DTA) under the reverse charge mechanism.The ruling, which sets a potential precedent, states that SEZ units could potentially sidestep the IGST obligation on designated services if they furnish a letter of undertaking (LUT) or a bond as specified by the government.This decision comes in the wake of a case involving Waaree Energies Ltd, a Surat-based SEZ unit engaged in solar module manufacturing, which sought clarification on the procurement of services.Under normal circumstances, service providers are liable to pay Goods and Services Tax (GST) to the government. However, under the reverse charge mechanism, it is the recipient of services who bears this responsibility.The AAR ruling addresses a longstanding ambiguity highlighted by the Tax Research Unit (TRU) at the Central Board of Indirect Taxes and Customs (CBIC). While a clarification by the TRU previously indicated that SEZ units can avail services subject to GST under the reverse charge mechanism without IGST payment upon furnishing an LUT, the AAR ruling now substantiates this stance.Sandeep Sehgal, a partner at tax and consulting firm AKM Global, emphasized the significance of this ruling for SEZ-based businesses. It aligns with the zero-rated intent of the GST Act as clarified by the TRU, allowing SEZ units to source services without the burden of Reverse Charge Mechanism (RCM), he stated. This ruling not only eases compliance for SEZ-based businesses but also fosters a more conducive environment for growth and investment in SEZs.With this ruling potentially setting a precedent, it could pave the way for smoother operations and reduced tax liabilities for businesses within SEZs, further bolstering India's economic landscape.

Infrastructure Urban

13 Mar 2026

Implementation Status of Jal Jeevan Mission

Since August 2019 the Government has implemented Jal Jeevan Mission to provide assured potable water through household tap connections in rural India. At the start of the mission only 32.3 million (mn) rural households, representing 16.7 per cent, were reported to have tap water connections. States and union territories have reported that 125.8 mn additional rural households have since been provided with tap connections. As a result, of about 193.6 mn rural households roughly 158.2 mn, or 81.71 per cent, are reported to have tap water supply at home.\n\nThe State, district and village level st..

Infrastructure Urban

13 Mar 2026

Jal Jeevan Mission Reaches Eighty One Per Cent Rural Coverage

The Government reported substantial progress under the Jal Jeevan Mission, launched in August 2019 to provide tap water to every rural household. At launch only 32.3 million (mn) rural households had tap connections and states and Union territories reported provision of 125.8 mn additional households by March 2026. Consequently, out of about 193.6 mn rural households around 158.2 mn, or 81.71 per cent, are reported to have tap water at home. The Finance Minister announced extension of the mission until 2028 in the 2025-26 budget speech. The Swachh Bharat Mission Grameen, launched in October 20..

Infrastructure Urban

13 Mar 2026

Empowering Local Governance for Sustainable Rural Water Supply

The Ministry of Jal Shakti has aligned the Jal Jeevan Mission (JJM) with the 73rd Amendment to strengthen village level planning and community ownership of water supply. Gram Panchayats, village water and sanitation committees and Pani Samitis are to plan, implement, manage and maintain piped water systems, with gram sabha processes formalising handover and oversight. Implementation support agencies including non government organisations, community based organisations and self help groups have been empanelled to train local committees and promote women participation. Under JJM, the department ..