Financial and Compliance Aspects of SEZ Operations with Reference to Domestic Tariff Area Procurement
Year: 2026
Type: article
Abstract: Special Economic Zones (SEZs) rely on zero-rated procurement from the Domestic Tariff Area (DTA) to deliver their principal indirect-tax benefit after the introduction of GST and the sunset of direct-tax holidays. This benefit is conditional on accurate, well-documented and correctly classified filings. This paper examines the financial and compliance aspects of DTA procurement through a descriptive, case-based study at Moon SEZ Consultants LLP, Pune, based on two months of participant observation (June to August 2026) covering more than 400 Request IDs on the SEZ Online portal, supplemented by secondary data on national SEZ performance. The analysis shows that SEZ exports rose from Rs 7.97 lakh crore in 2019–20 to Rs 16.36 lakh crore in 2025–26, an increase of about 105% and a compound annual growth rate of roughly 12.7%, with a single-year decline of 4.7% in 2020–21. About 68.5% of operational SEZs are concentrated in five states. At the transaction level, an eight-step workflow with layered controls (invoice review, HSN and GST reconciliation, LUT validation, Excel-based item upload, document upload and print-trail verification) underpins compliance. A worked case shows that zero-rating avoided Rs 2,78,456.40 of IGST on a Rs 15,46,980 invoice, about 15.3% of the gross value otherwise payable. The paper recommends automated pre-submission validation, a maker-checker control, a real-time tracking dashboard, structured training and better client communication, and policy support for SEZ development outside the leading states. The study contributes a finance-oriented, transaction-level view that complements the policy-focused SEZ literature. Keywords: Special Economic Zones; Domestic Tariff Area; zero-rated supply; IGST; Letter of Undertaking; compliance; SEZ Online; export performance
Language: English
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W7224602155