The Special Economic Zone (SEZ) Scheme is designed to promote exports, boost foreign investment, and enhance competitiveness of Indian businesses. SEZs are specially designated duty-free enclaves considered to be outside the customs territory of India for trade operations, duties, and tariffs.
Why SEZ Scheme is Important?
- Provides tax and duty benefits for companies operating in SEZs.
- Encourages foreign direct investment and boosts exports.
- Ensures world-class infrastructure and simplified procedures.
- Supports employment generation and regional economic growth.
Key Benefits of SEZ Units
- 100% Income Tax exemption on export income for the first 5 years, with reduced benefits thereafter.
- Exemption from customs duty, GST, and central excise on imports/procurements.
- Single-window clearance and simplified compliance.
- Exemption from minimum alternate tax (MAT) and dividend distribution tax (DDT) in certain cases.
- Permission for external commercial borrowings up to a prescribed limit.
Eligibility for Setting up an SEZ Unit
- Export-oriented businesses in manufacturing, services, IT/ITES, biotechnology, pharmaceuticals, etc.
- Approval required from the Development Commissioner of the SEZ.
- Proposal must meet minimum area and investment criteria as per SEZ rules.
Required Documents
- Application form in prescribed format to the Development Commissioner.
- Company registration documents (MoA, AoA, Incorporation Certificate).
- Project report and investment details.
- Import Export Code (IEC) and GST registration.
- Board resolution and authorization documents.
Key Tips
- Evaluate long-term tax benefits before opting for SEZ status.
- Ensure strict compliance with SEZ Act and Rules to avoid penalties.
- Maintain separate accounts for SEZ transactions for audit purposes.
- Regularly track DGFT and SEZ authority updates for policy changes.
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