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Sez (How To Do)


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Sez (How To Do)

  1. 1. SEZ Presented by Manoj Shah - Shah & Modi
  2. 2. Structure of SEZ BILL • Chapter I - Preliminary • Chapter II - Establishment of Special Economic Zone • Chapter III - Board of Approval • Chapter IV - Development Commissioner • Chapter V - Approval Committee • Chapter VI - Setting up of Units • Chapter VII - Fiscal provisions relating to Special Economic Zones • Chapter VIII - Special Economic Zone Authority • Chapter IX - Miscellaneous
  3. 3. Establishment of SEZ • Proposal from Developer to State Govt. • State Govt., may submit recommendation to Board of Approval (A Central Govt.,body). • Board of Approval may either accept or modify the proposal on certain terms & conditions. • After BoA’s communicating its approval, Central Govt., shall notify SEZ. • Development Commissioner shall monitor the performance of Developer.
  4. 4. Implications on Area getting Notified as SEZ • SEZ shall be deemed to be a territory outside the Customs territory of India for carrying out authorised operations • SEZ shall be deemed to be a port or a land customs station, as notified u/s 7 of Customs Act, 1962.
  5. 5. Areas within SEZ May be demarcated as : • Processing areas (for setting up of units for manufacture of goods or rendering of services) • Non processing areas
  6. 6. Definitions of Export & Import Export means : • taking out of India any goods or rendering any services from India by land, sea or air or by any other mode • Supply of goods or services from DTA into a SEZ • Supply of goods and services by a unit to another unit or Developer in the same or different SEZ
  7. 7. Defn. Continued…. Import shall mean: • bringing into a SEZ any goods or rendering of any services within such Zone from outside India • receiving of goods and services by a unit or Developer from another unit of the same SEZ or a different SEZ
  8. 8. Exemption from Taxes etc. Subject to the conditions prescribed, any goods or services exported out of or imported into a SEZ shall be exempt from payment of : • Central Taxes, Duties or Cess under the Central Laws prescribed in First Schedule
  9. 9. List of Central Laws • Customs Act, 1962 • Customs Tariff Act, 1975 • Central Excise Act, 1944 • Additional duty of Excise (Goods of Special Importance) Act, 1957 • Additional Duty of Excise (Textile and Textile Articles) Act, 1975 • Medicinal and Toilet Preparations (Excise Duties) Act, 1957
  10. 10. List of Central Laws Contd…... • Sugar (Special Excise Duty) Act, 1959 • Sugar Export Promotion Act, 1958 • Service Tax under Section 66 of Finance Act, 1994 • Central Sales Tax Act, 1956 • Mineral Products (Additional Duties of Excise and Customs) Act, 1958 • Sugar (Special Excise Duty) Act, 1950 • Duty of Excise under the Sugar (Production and Regulation) Act, 1974
  11. 11. List of Central Laws Contd…... • The Spices Cess Act, 1986 • The Agricultural & Processed Food Products Export Cess Act, 1986 • The Rubber Act, 1947 • The Tobacco Cess Act, 1975 • The Marine Products Export Development Authority Act, 1972 • The Tea Act, 1953 • The Agriculture Produce Cess Act, 1940 and 1966
  12. 12. List of Central Laws Contd…... • The Produce Cess Act, 1966 • The Textile Committee Act, 1966 • The Jute Manufacturers Cess Act, 1983 • The Industries (Development and Regulations) Act, 1951 • The R&D Cess Act, 1986 • The Salt Cess Act, 1953 • The Coal Mines (Conservation and Development) Act, 1974 • The Oil Industry (Development) Act, 1974 • The Sugar Cess Act, 1982
  13. 13. Benefits to Developer • Exemptions from following duties/taxes on goods and services brought into SEZ for Development, Operation & Maintenance thereof • Customs Duty • Excise duty • Service Tax • Sales Tax on sale or purchase from DTA or from Units of SEZ • Benefit of Drawback
  14. 14. Incentives/Benefits Contd... • Goods & Services admitted from DTA shall be treated as Export • Deduction in respect of Profits & Gains from Total Income • Income by way of dividends or interest or long term capital gains of an Infrastructure Capital Fund or Company from investments made in an Enterprise engaged wholly in the development operation & maintenance of SEZ
  15. 15. Benefits to Developer Contd.. • Exemption from Dividend Distribution Tax • Benefits to Subscriber • Subscription to equity shares/debentures for use wholly and exclusively for development, operation & maintenance of SEZ by Developer shall be treated as “eligible issue of capital” for the purpose of Rebate under Income Tax Act.
  16. 16. Benefits to Units in SEZ • Exemption from duties & taxes on capital goods, raw materials, consumables, office equipment or such other items as may be required for setting up,operation & maintenance of units – customs duty – Excise duty – Sales Tax (sale or purchase from DTA to SEZ units or sale/purchase between units of same or different SEZ shall be considered as export and import for the purpose of Central Sales Tax,1956
  17. 17. Benefits to Units in SEZ Contd... • Deduction in respect of profits & gains derived by owner of unit from Total Income of an entrepreneur under Income Tax Act. • 100% of profits for a period of 5 consecutive Assessment years starting from previous year in which unit begins to manufacture • 50% of profits for further five assessment years and thereafter • 50% of profits for next 10 consecutive assessment years, subject to creation of Reserve called “SEZ Re- investment Allowance Reserve”
  18. 18. Benefits to Units in SEZ Contd... • Conditions on Utilisation of Reserve: • to be utilised within 3 years on purchase of machinery • until the acquisition of machinery for the purpose of business ( but not for distribution of dividends or creation of assets outside India) • Non fulfillment of this condition will result in loss of exemption in case where amount is utilised in violation of conditions, in the year when it is so utilised and in case where amount is not utilised in the year immediately following the period of 3 years
  19. 19. Benefits to Units in SEZ Contd... • other conditions of present Sec.10A of new unit etc., shall also apply to this new proposed Section 10AA • Goods admitted from DTA or between same or different units of SEZ shall be regarded as export under Income Tax Act • exemption from capital gains on transfer of an industrial unit from Urban area to SEZ in terms of new proposed Sec. 54GG
  20. 20. Benefits to SEZ Units Contd... • Drawback on goods & services admitted from DTA • Exemption from Service Tax • Exemption from MAT under Income Tax Act
  21. 21. Misc. provisions relating to SEZ units • Unit shall be entitled to clear the goods manufactured in SEZ to the DTA upto 30% of the value of exports on payment of following duties • -- basic customs duty, safeguards duty and anti dumping duty leviable on imports • -- Central Excise • (This refers to only manufactured goods & not to service activities)
  22. 22. Misc. provisions contd.. • Every person whether employed or residing in a SEZ shall be issued a identity card • Setting up of a special court for suits of civil nature and for speedy trial of specified economic offences committed in SEZ • Central Government may authorise any agency or person for investigation in respect of specified economic offences
  23. 23. Summary • SEZ bill is attempted at making it a self contained code. • It encompasses within its ambit changes in Income Tax Act, Indian Stamp Act, Insurance Act & Banking Regulation Act