Special Economic Zone (SEZ), and the Benefits

A Special Economic Zone (SEZ) is a geographical region that has economic laws that are more liberal than a country’s typical economic laws. The category ‘SEZ’ covers a broad range of more specific zone types, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others. Usually the goal of a structure is to increase foreign direct investment by foreign investors, typically an international business or a multinational corporation (MNC).

With a view to overcome the shortcomings experienced on account of the multiplicity of controls and clearances; absence of world-class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000

Special Economic Zone Benefits

1   A Special Economic Zone (SEZ) is a “specifically delineated, duty-free enclave and shall be deemed to be foreign territory for the purposes of trade operations and duties and tariffs” (EXIM Policy 2000, Chapter 9, Para 30).

2   All trade inflows into the SEZ are treated as imports and all outflows from the SEZ are treated as exports.

3   The concept of SEZ was introduced by the Indian Government in the EXIM Policy 2000. Since then the SEZ Act has been passed in 2005 and the rules and regulations governing the same have been notified in 2006.

4   The preferential policy framework within which an SEZ functions is designed to give an impetus to exports and provide the necessary supporting environment to make these export hubs an attractive investment destination point for global players with multi-lateral trade dimensions.

5   Income tax holiday for 15 years.

* 100% for the first 5 years
* 50% for the next 5 years
* 50% for the following 5 years on plough back of profits

6   Exemptions from customs and excise duties, central sales tax and local taxes on construction material, capital equipment , raw material, spares, and consumables.

7   Exemption from service tax.

8   Exemption on stamp duty and land registration charges.

9   Single window clearances.

10   On-site customs and self-certification processes.

11   Repatriation of profits without dividend balancing permitted.

12   100% foreign direct investment permitted.
For more information, please visit www.sezindia.nic.in
All the benefits are as per the SEZ Act 2005 outlined by the Government of India. However local taxes / duties which are under the purview of the State Government are governed by the respective State Governments.