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Benefit of the Units of SEZ India | Company Vakil

SEZ India is simply known as the Special Economic Zone of India. It a type of duty free delineated enclave which is thought to be a foreign territory with the aims of trade operations, tariffs and duties. There are two types of trade operation involved in this. These are:

  1. Exports: The services and the goods that going from the area of domestic tariff to the area of SEZ are called the exports.
  2. Imports: The services and the goods that going from the area of SEZ to the area of domestic tariff are called the imports.

 

Generally, the government of the State is responsible leading a big role in setting up the Special Economic Zone with the association of the private sector. The foreign businesses or the domestic companies are allowed to set up only the units of the SEZ. An application is to be sent to the Commissioner of Development of the particular Special Economic Zone in order to get permission for setting up a unit of service or trade or manufacture. The following passages will show the benefits of using the units of SEZ India.

 

Benefits of the Customs and Excise

The following list shows the benefits of SEZ in the Customs and Excise Department.

  • The units of the SEZ India are permitted to procure and import all the important requirements for the capital goods, office equipment, materials for packing, spares, the consumables, and raw materials from the domestic sources free of duty with the aim of implementing the business in the Special Economic Zone without any specified permission or license.
  • With the aim to set up a SEZ unit, there will be no duty imposed on the domestic procurement or importation of the goods.
  • Utilization of the products or goods which are procured or imported domestically and which do not have duty imposed on them than be done over a span of five years.
  • Customs duty is applicable on the sale of the by-products and the finished products if they are done domestically.
  • Customs duty is applicable on the value of transaction on the sale of the scrap and waste if they are done domestically.

 

Benefits of the Income Tax

The following list shows the benefits of SEZ in the Department of Income Tax.

  • Benefits about the physical export
  • There is full exemption of Income Tax according to (10A) for a span of first five years and half exemption for the next two years after that
  • There is a fifty percent scope of “ploughed back profits” in the allowance of reinvestment
  • Losses are carried forward

 

Benefits of the FDI: Foreign Direct Investment

The following list shows the benefits of SEZ in the Department of FDI: Foreign Direct Investment.

  • The full automatic route has been allowed for 100 percent FDI in the field of manufacturing under the SEZ India project. However, a few item are excluded. These are:
    • Arms and ammunition
    • Atomic substance
    • Brewing and distillation of the alcoholic beverages
    • Cigars, cigarettes and substitutes for tobacco and such
    • Explosive
    • Hazardous chemicals
    • Narcotics
  • For the reserved items of the SSI, there is no capital for the foreign investments

 

Benefits of the field of Insurance, Banking and the External Commercial Borrowings

The following list shows the benefits of SEZ in field of Insurance, Banking and the External Commercial Borrowings.

  • In the Special Economic Zone, off-shore units of banking are permitted to be set up
  • There is the freedom to deliver in the proceeds of the export with no time limitations
  • There is an absence of the maturity restrictions and the permission for borrowing external commercials to a whopping 500 dollar per year is allowed.
  • There is full exemption of Income Tax according to the allowance of the OBUs for a span of first three years and half exemption for the next two years after that
  • It is flexible enough to put the total proceeds of the export in the EEFC account and investments are allowed to be made from it from the overseas.
  • There is permission to hedge commodity.
  • The rate surcharge of the interest has been exempted for the import finances
  • The unrealized bills of export can be written off by the units of SEZ India.

 

Benefits of the field of Service Tax and Central Sales Tax

The following list shows the benefits of SEZ in the field of Service Tax and Central Sales Tax.

  • The sales which are done from the area of domestic tariff to the unit of SEZ are exempted.
  • The service tax to the units of SEZ are exempted.

 

Benefits of the field of Approvals and Licenses

The following list shows the benefits of SEZ in the field of Approvals and Licenses.

  • The Special Economic Zones are allowed to form industries in the IT which do not make pollution and other similar facilities like the hotels, desalination plants, golf courses and the services industries located in the Regulation Zones of the coastal area.
  • In accordance with the notification of the “Environment Impact Assessment”, public hearing has been exempted for the units of SEZ.
  • In accordance with the “Drugs & Cosmetics Rules”, the restriction of the ports has been exempted for the units of SEZ.

 

Benefits of the Companies Act

The following list shows the benefits of SEZ according to the Companies Act.

  • For the remuneration of the department of management, an annual allotment of 2.4 Cr rupees have enhanced.
  • In the Special Economic Zones, a petition to start up the Regional Office for the Registrar of the Companies have been agreed upon.
  • The requirement of being domicile in the SEZ India for minimum twelve months before being appointed as the Director has been removed.

For more details and quick and hassle-free legal services visit companyvakil.

 

 

 

 

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