Advantages of a SEZ unit. Government benefits in India for a SEZ Unit.

Posted on 11 April 2023 Category : For Beginners

Government benefits in India under a SEZ Unit.

Incentives and facilities offered to the SEZs. What are the Benefits under STP scheme? What are the Advantage under STP scheme to an Exporter.

I have been receiving many enquiries seeking information about various government benefits under SEZ Unit. Let me write below a common reply on various questions asked by readers of this website about the benefits covered under Special Economic Zone. I hope, these details helps to enlighten about the government benefits offered to SEZ – Special Economic Zones.

The incentives and facilities offered to the units in SEZs for attracting investments into the SEZs, including foreign investment include:

Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units

100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.

Exemption from minimum alternate tax under section 115JB of the Income Tax Act.

External commercial borrowing by SEZ units upto US $ 500 million in a year without any maturity restriction through recognized banking channels.

Exemption from Central Sales Tax.

Exemption from Service Tax.

Single window clearance for Central and State level approvals.

Exemption from State sales tax and other levies as extended by the respective State Governments.

The major incentives and facilities available to SEZ developers include:-

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).

Also read How to get export order from foreign buyers?

Did this article helps you in getting information about advantage of a SEZ unit in India with various government benefits offered?

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Comment below your thoughts on various benefits and advantages of SEZ – special economic zones in India.

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Comments

haresh khambhadiya: On 18 February 2015 I am interesting to send diamonds to usa directly instead of surat or mumbai. But i dont know export duty rate, courier rate,how to open bank account for internatiinal trade, how get money in dollor in indian bank account, how to packaging, how to send safely, if not purchase by party how get back without duty, how to make bill for clients, which type of permisson or registration would required to with indian goverment.

Admin: On 18 February 2015 haresh khambhadiya, Approach an expert to handle your needs

Muralipillai Koickal : On 19 February 2015 I had been working with various companies such as Thermax Pune (DTA), Suzlon Mangalore (SEZ), Hani Era Textiles Mumbai(EOU) , and at last Metro Valley SEZ Gurgaon in managerial cadre. In fact I have had set up an end number of 100% EOU, SEZ, SEZ Units in various parts of the country. Unfortunately Metro Valley got into some land problems and as such their project is held up and the SEZ is not yet commissioned. Due to this I have started Consultancy in the arena of SEZ, EOU and related customs excise etc Presently I am settled in Pune and am having some clients. Since I have worked with SUZLON Mangalore I am having a good rapport with customs people at Development Commissioners Office at Cochin. In case you are having any contacts with Special Economic Zone/ SEZ Units, 100% EOUs, in and around Karnataka, Kerala please suggest my name so that we can work together on sharing basis .

vishnu vardhan raju Uppalapati: On 11 March 2015 I have a query which I will explain in detail below, please if you have any solution please do let us know. We are an IT software services export company working in SEZ zone as of now (i.e)from last 3 years, before 3 years.Before 3 year period our office doesn’t come in STPI or SEZ zone but working as normal independent company from outside.We planned to take premises from SEZ zone and we requested our client to help us in provide us financial support to set up this premises (though there is some amount with us which is not sufficient to complete the works and set-up in SEZ – we got extra remittances from our client for two times which is about Rs.1.2mill and in the FIRC the purpose was mentioned as Against software services – now I would like to return it back to my client between there is no Invoice for this remittances as for the said amount I haven’t made any software exports to my client. When I asked my banker-he asked me for the invoice which I don’t have as that amount is borrowed for building the office infrastructure. we just had an agreement between my client and us.Secondly if I want to change the purpose in my FIRC how do we proceed with the bank. Please give us your valuable suggestion on this

suresh: On 04 July 2015 We have imported a capital machine under EPCG licence in 'A' company at Pune. We have another 'B; company having unit in SEZ, Gujarath. Now we want to export from SEZ Gujarath utilizing Third Party procedure. The machine is indirectly used by SEZ unit. Is it okey

ARJUN SINGH: On 09 October 2016 How Much amount can be invest in existing unit in sez for getting the income tax benefit or we can apply for new LOP for income tax benefit

riken shah: On 18 October 2016 Dear Sir, Pls. share information regarding custom & excise clearance & documentation flow in sez. Thanks & Regards, Riken Shah

chintan siroya: On 10 March 2017 from where i can get information of product which i can import to india without any duty if i am exporting earthing rod zinc coated made from mild steel

PRADIP P JOSHI: On 22 June 2017 is GST applicable on Astrology income ?

WINDSOR INDUSTRIES: On 08 August 2017 I would like to know that, shall we make exempted bill to SEZ after implementation of GST like earlier what we do in VAT.

adarsh: On 02 January 2019 Is their any Exemption on Electricity bill in SEZ unit If Yes pls help me with procedure Our unit commencement year is 2002.

Nithin: On 30 August 2019 I need to do a business from Singapore(supplier) to Coimbatore SEZ Unite(Buyer).what all benefits can sez customer get. 1.Will he be exempted from taxes(GST18%) 2.Will he have custom duty benefit(if yes i wanted the documentation for the same)?

brighty xavier: On 10 January 2020 can anyone tells about is MAT is applicable for sez unit

samir sardana: On 13 August 2020 India is doomed and the Indian SEZ Policy is doomed.dindooohindoo • The pathetic state of the exports from the SEZ is assessed by the number of non-operative units and the poor capacity utilisation of the SEZ units - information of which is in public and national interest • The planning of the GOI is highlighted by the fact that the GOI has done no benchmarking of the operations of the SEZ per se, and the SEZ units within - for each sector with comparable peersl,in India and the global competition • If a sector, say X,exists in a SEZ in a specific maritime geography and its global export hub,is in Country A, and the GOI has not been benchmarking the operating parameters of the Indian SEZ and the SEZ units of that sector (X),every 3 years - then the said SEZ units in sector X,in India,will definitely cease to exist,or be in a state of terminal decline or exist at the mercy of competitors • With the miserable performance of the Indian Rupee,and its impact of reduction in Dollarised Rupee costs payable to the SEZ authority by the SEZ units - why are the exports from the SEZs still a failure In addition, in several sectors, the rupee costs paid by the SEZ units to the SEZ Authority,are not the determinant for operating and financial viability of the SEZ units • In essence,the GOI has utterly failed to provide a level playing field to exporters in this nation,in terms of admin costs,operating cost neutrality,financing costs,effective logistics costs and fiscal red tape and procedures • The centres of manufacturing excellence near SEZs (For CMT/Job work/Material and Labour sourcing) are not cost effective - as there is no synergy between the SEZ and the Industrial planning and policy • The strategy of the GOI is highlighted by the fact that the GOI has engaged no 3 rd party to analyse the inefficiency of the operating parameters of the SEZ , per se, and the SEZ units within the SEZ - for each sector within it , with comparable peers in India,and the global competition • What planning and strategy will the GOI do,if it has no formal analysis of the specific operating costs,parameters,management and other issues,which explain the dismal state of the SEZ units by sector,scale and management quality • The dismal state of the GOI planning is that the GOI has not properly planned the sector profile of the units in each SEZ, to ensure that the right sectors are in the appropriate geography,in the right SEZ,to minimise the net logistics costs on the EXIM chain, and minimise the inward material logistics costs - considering the future dislocations in inward and external material sources and options of transhipment and alternative export markets • Several SEZs invest limited equity in SEZ units and common service providers,like banks,facilities,hotels,accounting firms etc,as a demonstration of their stake in the SEZ and their strategic inputs in the planning and operation of the same - which is then used to lower the lease charges etc - which is completely absent in India • All of the above is to be seen in light of the fact that the SEZ has no data of the financial or operating performance of the SEZ units,loss making units or even the financial and operating performance of the Developers of the SEZ - and is naturally not concerned with the losses or the financial performance of the SEZ units therein • The peculiar pattern of CMT and Job workers of key sectors such as Gold and Diamond jewellers,with multiple movement of stocks at different processors o/s the SEZ - is not the norm for Gems and Jewellery SEZs or SEZ units - and represents an abnormal industrial agglomeration with a planned and structural dislocation in manufacturing and processing operations - which cannot be solely for the purposes of manufacturing and commercial efficiency. • Information on raids and prosecutions is critical especially in sectors with high import duties (on merit mode) for inputs,customised finished goods (wherein DRI/Customs cannot assess over invoicing),frequent movements to and from 3 rd party processors (which makes the case for wastages and losses in SION and disappearing materials), materials where the EXIM transit time is a few hours and the logistics costs are less than 1% of CIF/FOB rates, inputs and outputs with marked diferences in rates of different grades of items and offgrades,per se,warehousing artificial losses,amortisable costs ,bad debts and write offs in select SEZs (to be used for 3rd party exports or mergers to obviate tax on SEZ profits),items where the SEZ units are well aware of the sampling and test checks of the DRI and Customs at the SEZ for the inputs and outputs etc. • The Gems and Jewellery industry is run by cartels from a particular community spread from Western India to North America,EU,East Asia,West Asia and Africa and is a well coordinated money laundering and smuggling operation from the state of rough diamonds and raw gold,to the marketing of jewellery and warehousing of processed and raw diamonds,the banking chain,raters and the chain of associate and front companies - which is all the more insidious,as all the data with DRI/ED/Customs/Interpol used by the Indian State for surveillance is all origined from the overseas counterparts and partners of the Indian traders located in India (Who are in many cases - in spirit the same de facto entity owners) • The premise that Indians are the least cost labour source for the jwellery sector and their informal working style (w/o documentation,using informal labour and in slum style conditions) is an innovative marvel of Indian Genius,is a pathetic fraud and deception,and the entire array of fiscal and monetary sops for this sector (including SEZ) Allows the sector to generate financial buffers via money laundering,tax arbitrage,treasury operations, merchanting exports,accomodation financing ,cash financing, alternative fund transfers,FX speculation,leveraging double and layered financing,defrauding Indian Merchant exporters such as STC and MMTC,Credit insurance fraud etc. which provide the sector the pricing edge in overseas markets ( via illegal,nefarious and fraudulent means)

kannan subramanian: On 19 July 2021 i would like to know under which sez rule no is allowed write off for unrealized export proceeds