The Special Economic Zone (SEZ) Act is set to change. To amend the law, the government can bring an ordinance for next week. Some provisions of the law are not in line with the goods and services tax (GST) system. These will be adapted to the new tax system. GST is going to be implemented from July 1.

The sources said that the commerce ministry is working in this regard. One July will need to change the incompatible provisions before the GST rollout. Take the rules of duty drawback, for example. Under this, concession is granted to exporters in duty during the production of goods. Such rules will need to be tailored to the new indirect tax system.

Under current rules, units get exemption from service tax in SEZs. Developers are exempt from customs duty or excise duty for the development zone for the sake of authorized operations. Apart from this, developers and entrepreneurs have to amend section 26 of the SEZ Act related to exemption, drawback and concessions.