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Special Economic Zones
Key Benefits
SEZ – Genesis
SEZs, the new engines for export led economic growth in India, are defined as:SEZs, the new engines for expo...
SEZ Eligibility
» Positive Net Foreign Exchange Earnings (PNFE) to be calculated cumulatively for aPositive Net Foreign Ex...
SEZ Act - Policy Highlights
» Duty free enclaves, to be treated as foreign territory forDuty free enclaves, to be treated ...
…….Policy Highlights
» No customs duty on import of capital goods related to production, rawNo customs duty on import of c...
…….Policy Highlights
» Duty free goods can be utilized over a period of five yearsDuty free goods can be utilized over a p...
Total Saving in an SEZ = A + B + C = 33.99%Total Saving in an SEZ = A + B + C = 33.99%
» IT Exemption (subject to Minimum ...
» Other Fiscal Benefits
 Service tax exempted in SEZ
 No excise duty on materials brought into SEZ
 Exemption of Centra...
» Foreign Direct Investment
 100% foreign direct of Approval. investment is freely allowed in
manufacturing sector in SEZ...
SEZ Unit - Benefits
» Companies Act
 Enhanced limit of Rs. 2.4 crores per annum allowed for managerial
remuneration
 Reg...
SEZ Unit - Benefits
» Sub – Contracting
 SEZ units may also sub-contract part of their production
process abroad and expo...
DTA Supplier Benefits
» All supplies will be treated as physical
exports. Entitlements:
 Duty drawback / DEPB
 Exemption...
For further assistance please contact :-For further assistance please contact :-
Ms. Raghini Peter
Sr. Vice-president – Bu...
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Indian Sez key benefits

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India being one of the first to recognize the effectiveness of EPZ, announced the first Special Economic Zone policy in April 2000, in order to overcome the short comings experienced on account of the multiplicity of controls and clearances; absence of world-class infrastructure, and an unstable fiscal regime, with a view to attract larger foreign investments in India.

Sri City, a multi-product Special Economic Zone located 55 km from Chennai, on the border of TN & AP is built on the concept of work-live-learn-play and provides all that a business needs.

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Transcript of "Indian Sez key benefits"

  1. 1. Special Economic Zones Key Benefits
  2. 2. SEZ – Genesis SEZs, the new engines for export led economic growth in India, are defined as:SEZs, the new engines for export led economic growth in India, are defined as: “ 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 » Attract FDI and foster overall economic growthAttract FDI and foster overall economic growth » Liberal economic framework for hassle-free operationsLiberal economic framework for hassle-free operations » Integrated infrastructure for shorter turnaround cyclesIntegrated infrastructure for shorter turnaround cycles
  3. 3. SEZ Eligibility » Positive Net Foreign Exchange Earnings (PNFE) to be calculated cumulatively for aPositive Net Foreign Exchange Earnings (PNFE) to be calculated cumulatively for a period of five years from the commencement of production according to theperiod of five years from the commencement of production according to the following formula :-following formula :- PNFE : A – B = > 0 Where A: FOB Value of Exports + Value of Supplies in the Domestic Market as against Advance License , DEPB & EPCG schemes and other permissible supplies specified in Rule 53. A of SEZ Rules, 2006 B: CIF Value of Imports + Value of Procurement from EOU/EHTP/STP/BTP/Bonded Warehouses + amortized rate of 10% on capital goods and lump sum payment on foreign technical know-how fee, from 1st year to 10th year » A review will be done at the end of 3 years to assess progressA review will be done at the end of 3 years to assess progress
  4. 4. SEZ Act - Policy Highlights » Duty free enclaves, to be treated as foreign territory forDuty free enclaves, to be treated as foreign territory for trade operations, duties and tariffstrade operations, duties and tariffs » Services and Manufacturing operations are allowed. Trading also allowed inServices and Manufacturing operations are allowed. Trading also allowed in the Free Trade Warehousing Zone of the SEZthe Free Trade Warehousing Zone of the SEZ » All sale of goods from Domestic Tariff Zone (DTZ) to the SEZ units to be treatedAll sale of goods from Domestic Tariff Zone (DTZ) to the SEZ units to be treated as physical exports. DTZ supplier would be entitled to all export benefits.as physical exports. DTZ supplier would be entitled to all export benefits. » Setting up of Off-shore Banking Units allowed in SEZsSetting up of Off-shore Banking Units allowed in SEZs » In-house Customs ClearanceIn-house Customs Clearance
  5. 5. …….Policy Highlights » No customs duty on import of capital goods related to production, rawNo customs duty on import of capital goods related to production, raw material, sparematerial, spare » No routine cargo examination by customs. Self CertificationNo routine cargo examination by customs. Self Certification » Domestic Sales allowed on payment of applicable dutyDomestic Sales allowed on payment of applicable duty » Freedom to bring in exports proceeds without any time limitFreedom to bring in exports proceeds without any time limit » Flexibility to keep 100% of export proceeds in Foreign Currency AccountFlexibility to keep 100% of export proceeds in Foreign Currency Account
  6. 6. …….Policy Highlights » Duty free goods can be utilized over a period of five yearsDuty free goods can be utilized over a period of five years » Can undertake job work on behalf of domestic exporters or for third countryCan undertake job work on behalf of domestic exporters or for third country exportsexports » No minimum export performance required. Only positive Foreign ExchangeNo minimum export performance required. Only positive Foreign Exchange earner. Foreign exchange earnings to be at least equal to value of purchasesearner. Foreign exchange earnings to be at least equal to value of purchases from DTZ.from DTZ. » Support service like banking, post office, clearing agents etc. will provided inSupport service like banking, post office, clearing agents etc. will provided in Zone ComplexZone Complex » Performance of the units will be monitored by a Committee headed byPerformance of the units will be monitored by a Committee headed by Development CommissionerDevelopment Commissioner
  7. 7. Total Saving in an SEZ = A + B + C = 33.99%Total Saving in an SEZ = A + B + C = 33.99% » IT Exemption (subject to Minimum Alternative Tax of 18.5% )IT Exemption (subject to Minimum Alternative Tax of 18.5% ) 100% IT tax holiday for first 5 years 50% for the next 5 years 50% of the profits as is debited to the profits and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account » Tax StructureTax Structure A. Corporate Tax of : 30 % B. Surcharge of 10% on (A) : 3% C. Education Cess of 3 % of (A + B) : 0.99% SEZ Unit - Benefits
  8. 8. » Other Fiscal Benefits  Service tax exempted in SEZ  No excise duty on materials brought into SEZ  Exemption of Central Sales Tax paid on domestic purchases  Exemption from all local taxes and Sales Tax  Exemption on taxes for building materials.  100% exemption from stamp duty & registration charges. SEZ Unit - Benefits
  9. 9. » Foreign Direct Investment  100% foreign direct of Approval. investment is freely allowed in manufacturing sector in SEZ units under automatic route, except prohibited items  No cap on foreign investments for SSI reserved items  Sectoral norm, as notified by Government, apply to foreign investment. Cases not covered by automatic route are considered and approved by the Board SEZ Unit - Benefits
  10. 10. SEZ Unit - Benefits » Companies Act  Enhanced limit of Rs. 2.4 crores per annum allowed for managerial remuneration  Regional office of Registrar of Companies in SEZs  Exemption from requirement of domicile in India for 12 months prior to appointment as Director
  11. 11. SEZ Unit - Benefits » Sub – Contracting  SEZ units may also sub-contract part of their production process abroad and export from the third country  SEZ units may sub-contract part of production / process to DTZ units or other EOU / SEZ units  SEZ units can undertake job-work from DTZ for export Agriculture / Horticulture processing SEZ units allowed to provide inputs and equipment to contract farmers in DTZ
  12. 12. DTA Supplier Benefits » All supplies will be treated as physical exports. Entitlements:  Duty drawback / DEPB  Exemption from Central Excise Duty  Exemption from CST  Exemption from State levies  Discharge of Export Performance if any on the suppliers  Income-tax exemption under Section 80-HHC
  13. 13. For further assistance please contact :-For further assistance please contact :- Ms. Raghini Peter Sr. Vice-president – Business Development raghini@sricity.in Mobile : +91-98404-44085 Chennai Office: 85, Kutchery Road, Mylapore Chennai – 600 004, Tamil Nadu, India +91-44-3940 2000; enquiry@sricity.in www.sricity.in CONTACT

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