Special Economic Zones (SEZs)

Ministry/Department:  Department of Commerce, Ministry of Commerce & Industry
Objective: This policy intended to make SEZs an engine for economic growth supported by quality infrastructure complemented by an attractive fiscal package, both at the Centre and the State level, with the minimum possible regulations
  • SEZ are set up under Special Economic Zones Act, 2005 as duty free enclaves to be treated as foreign territory for the purpose of trade operations and duties and tariffs.
  • SEZ are allowed for manufacturing, trading and service activities.
  • A single window SEZ approval mechanism by Board of Approval
  • Application recommended by states/UTs are approved by BOA
What are the incentives for units in SEZs:
  • 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.
Factual Information:
  • Started in 2005
  • There are 205 operational SEZs (As on 18/02/2016)

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