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| Benefits to SEZ Units |
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Income tax:- |
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- Deduction from Profits and Gains from export of goods/services as follows (Section 10AA)
100% income tax exemption for first 5 years
50% income tax exemption for next 5 years
Income tax exemption for next 5 years to the extent of profits
reinvested (Maximum 50%)
- No MAT (Minimum Alternate Tax)
- Capital Gains tax exemption on relocation to SEZ (Section 54GA):- This is a controversial issue as to be eligible for income tax exemption, the unit should be a new unit. Further, a press statement from Hon. Minister for Commerce and Industry, Mr. Kamal Nath, mentions that SEZs are basically for fresh investments
- No TDS by Overseas banking Units (OBUs) on interest on deposits/borrowings from non-resident or person not ordinarily resident
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Indirect taxes:- |
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- SEZ units may import or procure from the domestic sources. Duty free, all their requirements of capital goods, raw materials, consumables,
spares, packaging materials, office equipment, DG sets etc. for
implementation of their project in the Zone without any license or
specific approval
- No import duty on these goods imported
- No excise duty on these goods procured from DTA (Domestic Tariff Area)
- No service tax on services availed from DTA (Domestic Tariff Area)
- No Value Added Tax (VAT) and Central Sales Tax (CST) on goods procured from DTA (Domestic Tariff Area)
- On goods procured from DTA, drawback under section 75 allowed to SEZ unit
- Goods imported/procured locally duty free could be utilised over the approval period of 5 years
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Other incentives / concessions for SEZ units:- |
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- 100% FDI under automatic route allowed in manufacturing sector in SEZ units (except few sectors)
- No cap on FDI for SSI reserved items
- External Commercial Borrowings (ECB) by units upto $500 million a year allowed without any maturity restrictions
- Freedom to bring in export proceeds without any time limit
- Flexibility to keep 100% of export proceeds in EEFC account
- SEZ units allowed to write off unrealised export bills
- SEZ units may sub-contract part of production or production process through units in DTA/another SEZ/EOU units
- SEZ units may sub-contract part of process abroad
- Inter-unit sales permitted provided payment in Foreign Currency
- Exemption from interest rate surcharge on import finance
- Enhanced limit of Rs. 2.4 crores per annum allowed for managerial remuneration
- Agreement to opening of Regional office of Registrar of Companies in SEZs
- Exemption from requirement of domicile in India for 12 months prior to appointment as Director
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