SEZ Unit Benefits In India

SEZ Unit Benefits In India

For trade operations, duties, and tariffs, an SEZ or Special Economic Zone (SEZ) is a precisely delimited duty-free enclave that is regarded to be foreign territory. Exports of goods and services from the domestic tariff area are classified as exports, whereas imports of goods and services from the SEZ are handled as imports. State governments have a lead role in the fixing of SEZ in association with the private sector. Foreign or domestic businesses can find units in Indian SEZs. to line up a producing, trading or service unit in an SEZ, the appliance must be made to the event Commissioner of the SEZ.

Features Of Special Economic Zone (SEZ) In India

  • Enterprises that found their establishment in SEZs are entitled to incentives, which can include free electricity, installation, subsidy on land prices, etc.
  • These economic zones have been declared as duty-free industrial parks, with trade activities, duties, and tariffs regarded as if they were foreign territory.
  • Usually, no license is required for import and businesses get exemption from custom, on import of capital goods, raw materials, consumable spares, etc.
  • SEZs may enjoy exemption from payment of nuisance tax and repair tax on the sale or purchase of products or services.
  • Any supply of products or services or both to an SEZ unit is taken into account as a zero-rated supply. In other words, supplies into SEZs are excluded from GST and are deemed exports.
  • employer-friendly labor rules are one of the most essential characteristics of special economic zones. Because SEZ units are deemed ‘public utility services,’ no strikes are permitted in such businesses without first providing the employer six weeks’ notice, in addition to the other provisions of the Industrial Disputes Act, 1947.

SEZ Benefits

Special Economic Zones (SEZs) are founded to push rapid economic processes within the country. the most objectives include promoting exports of products and services and inspiring investment from domestic and foreign sources. Infrastructure development and the creation of employment opportunities are among the numerous benefits of special economic zones.

Customs And Excise Benefits

  • SEZ units are permitted to import or acquire duty-free from domestic sources all of their capital goods, raw materials, consumables, spares, packing materials, office equipment, and other items they require for the operation of their company within the SEZ.
  • Duty-free import and domestic procurement of products for putting in of SEZ units.
  • Goods imported or procured locally duty-free might be utilized over the approval period of 5 years.
  • Domestic sale of completed goods and by-products, subject to customs clearance.
  • Domestic sale of rejects and waste and scrap on payment of applicable customs on the transaction value.

Income Tax

  • Physical export benefit.
  • 100% IT exemption (10A) for the primary 5 years and 50% for two years thereafter.
  • Reinvestment allowance to the extent of fifty of ploughed back profits.
  • Carry forward of losses.

Foreign Direct Investment (FDI)

SEZ Unit Benefits In India

  • 100% FDI under the automated route is allowed within the manufacturing sector in SEZ aside from arms and ammunition, explosives, atomic substance, narcotics and dangerous chemicals, distillation and brewing of alcoholic drinks and cigarettes, cigars and made tobacco substitutes.
  • For SSI restricted products, there is no limit on foreign investment.

Banking, Insurance & External Commercial Borrowings

  • SEZs permit the establishment of off-shore banking entities.
  • Freedom to herald export proceeds with no cut-off date.
  • External commercial borrowings by units up to $500 million a year are allowed with no maturity restrictions.
  • OBUs allowed 100% tax exemption on profit for 3 years and 50% for the following 2 years.
  • Flexibility to stay 100% of export proceeds in the EEFC account. Freedom to create overseas investment from it.
  • Commodity hedging is permitted.
  • Exemption from a charge per unit surcharge on import finance.
  • SEZ units are allowed to put in writing off unrealized export bills.

Central Excise & Service Tax

  • Exemption to sales made up of domestic tariff area to SEZ unit.
  • Exemption from service tax to SEZ units.

Licenses & Approvals

  • SEZs are permitted to own non-polluting industries in IT and facilities like golf courses, desalination plants, hotels and non-polluting service industries within the coastal regulation zone area.
  • Environmental Impact Assessment notice exempts SEZ units from a public hearing.
  • The Drugs and Cosmetics Rules exempt SEZ entities from port restrictions.

Companies Act

  • An enhanced limit of Rs.2.4 crores every year allowed for managerial remuneration.
  • Agreement on the establishment of a regional office of the Registrar of Companies in Special Economic Zones. Exemption from requirement of domicile in India for 12 months before appointment as Director.

Who Sets Up SEZs?

In India, most of the SEZs are founded through a collaboration between the state and central governments. However, any private, public or joint sector agency may find SEZs. State governments have a really important role to play within the establishment of those economic zones, because the proposals need to be approved by the local authorities initially, who should give their consent for providing basic infrastructure facilities to the delineated area, like water, electricity, transportation, etc. Also, the statutory functions of maintaining these SEZs rests with the govt. A unit approval committee is created, which consists of a development commissioner, customs officer and a government representative, who monitor the performance of SEZs.