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.
Any person, who intends to set up a Special Economic Zone, may after identifying the area make a proposal in Form A to either State Government concerned or Board of Approval.
15 copies of application, indicating name and address of the applicant, status of the promoter along with a project report covering the following particulars may be submitted to the Chief Secretary of the State:
The State Government shall, forward it along with their commitment to the following to the Department of Commerce, Government of India:
The proposal incorporating the commitments of the State Government will be considered by an Inter-Ministerial Committee in the Department of Commerce. On acceptance of the proposal, a letter of permission will be issued to the applicant.
State Governments will have a very important role to play in the establishment of SEZ. Representative of the State Government, who is a member of the Inter-Ministerial Committee on private SEZ, is consulted while considering the proposal. Before recommending any proposals to the Ministry of Commerce & Industry (Department of Commerce), the States must satisfy themselves that they are in a position to supply basic inputs like water, electricity, etc.
Exemption from customs/excise duties for development of SEZs for authorized operations approved by the BOA.
Income Tax exemption on income derived from the business of development of the SEZ in a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act.
Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act.
Exemption from dividend distribution tax under Section 115O of the Income Tax Act.
Exemption from Central Sales Tax (CST).
Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ Act).
The incentives and facilities offered to the units in SEZs for attracting investments into the SEZs, including foreign investment include:
Normal Labour Laws are applicable to SEZs, which are enforced by the respective state Governments. The State Government has been requested to simplify the procedures/returns and for introduction of a single window clearance mechanism by delegating appropriate powers to Development Commissioners of SEZs.
Supplies from Domestic Tariff Area (DTA) to SEZ to be treated as physical export. DTA supplier would be entitled to:
Performance of the SEZ units monitored by a Unit Approval Committee consisting of Development Commissioner, Custom and representative of State Govt. on annual basis.
In all SEZ's, the statutory functions are controlled by the Government. Government also controls the operation and maintenance function in the 7 Central Government controlled SEZs. In rest of the operation and maintenance are privatised.
No. State has exempted the sales from DTA to SEZ from local levies and taxes.
Development Commissioner is the nodal officer for SEZs and help in resolution of problem, if any, faced by the units / developer.
External commercial borrowings by units up to $ 500 million a year allowed without any maturity restrictions For details please see guidelines issued by RBI (F.No. 4(2)/2002-ECB, dated 15.9.2002 ).
One condition under which SEZ Units operate is that there is a fixed period of approval during which time the units must meet the condition of achieving positive NFE. This period is 5 years. It is evident that upon completion of this period the unit has the option to exit from scheme (though it may also opt to continue in the SEZ for a fresh period of 5 years) which would also mean its physical departure from particular zone.
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