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  • Special Economic Zones Terms and Condition with Advantages and Disadvantages of SEZ.
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    Advantages and Disadvantages of SEZ.


     

    Introduction

    A SEZ unit which has been set up for carrying on manufacturing, trading or service activity has both advantages as well as disadvantages. SEZ advantages are quite far more as compared to its disadvantages which are almost negligible.

     Advantages

    • 15 year corporate tax holiday on export profit – 100% for initial 5 years, 50% for the next 5 years and up to 50% for the balance 5 years equivalent to profits ploughed back for investment.

    • Allowed to carry forward losses.

    • No licence required for import made under SEZ units.

    • Duty free import  or domestic procurement of goods for setting up of the SEZ units.

    • Goods imported/procured locally are duty free and could be utilized over the approval period of 5 years.

    • Exemption from customs duty on import of capital goods, raw materials, consumables, spares, etc.

    • Exemption from Central Excise duty on the procurement of capital goods, raw materials, and consumable spares, etc. from the domestic market.

    • Exemption from payment of Central Sales Tax on the sale or purchase of goods, provided that, the goods are meant for undertaking authorized operations.

    • Exemption from payment of Service Tax.

    • The sale of goods or merchandise that is manufactured outside the SEZ (i.e, in DTA) and which is purchased by the Unit (situated in the SEZ) is eligible for deduction and such sale would be deemed to be exports.

    • The SEZ unit is permitted to realize and repatriate to India the full export value of goods or software within a period of twelve months from the date of export.

    • “Write-off” of unrealized export bills is permitted up to an annual limit of 5% of their average annual realization.

    • No routine examination by Customs officials of export and import cargo.

    • Setting up Off-shore Banking Units (OBU) allowed in SEZs.

    • OBU's allowed 100% income tax exemption on profit earned for three years and 50 % for next two years.

    • Exemption from requirement of domicile in India for 12 months prior to appointment as Director.

    • Since SEZ units are considered as ‘public utility services’, no strikes would be allowed in such companies without giving the employer 6 weeks prior notice in addition to the other conditions mentioned in the Industrial Disputes Act, 1947.

    • The Government has exempted SEZ Units from the payment of stamp duty and registration fees on the lease/license of plots.

    • External Commercial Borrowings up to $ 500 million a year allowed without any maturity restrictions.

    • Enhanced limit of Rs. 2.40 crores per annum allowed for managerial remuneration.

    Disadvantages

    • Revenue losses because of the various tax exemptions and incentives.

    • Many traders are interested in SEZ, so that they can acquire at cheap rates and create a land bank for themselves.

    • The number of units applying for setting up EOU's is not commensurate to the number of applications for setting up SEZ's leading to a belief that this project may not match up to expectations.


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    What is New?

    Date: 23-09-2016
    Trade Notice No. 18/2016
    Clarification in respect of definition of service provider under Common Service Providers (CSP) in Export Promotion Capital Goods (EPCG) scheme.

    Date: 23-09-2016
    Customs Notification No. 51/2016
    Seeks to further amend notification No.12/2012-Customs dated the 17th March, 2012, so as to: 1. Reduce import duty on potatoes from 30% to 10% up to 31.10.2016. 2. Reduce import duty on wheat from 25% to 10% up to 29.02.2017. 3. Reduce import duty on palm oil from 12.5% to 7.5% for crude palm oil of edible grade, and from 20% to 15% for refined palm oil of edible grade.

    Date: 23-09-2016
    DGFT Public Notice No. 33/2015-2020
    Amendment in ANF-5A [Applicationj for issue of EPCG Authorisation ] incorporating the guideline for designating/certifying a Common Service Provider (CSP) under Para 5.02 (b) of FTP 2015-20-reg.

    Date: 22-09-2016
    Customs Notification No. 122/2016 (NT)
    Rate of exchange of conversion of the foreign currency with effect from 23rd September, 2016

    Date: 22-09-2016
    Customs Circular No. 44/2016
    Regarding setting up of 'Custom Clearance Facilitation Committee' (CCFC) for Land customs stations and Inland Container Depots-reg

    Date: 22-09-2016
    Trade Notice No. 17/2016
    Refund of Terminal Excise Duty(TED) under Deemed Exports where Duty has been paid from CENVAT Credit and ab-initio waiver is not availabe.

    Date: 22-09-2016
    Customs Notification No. 50/2016
    Seeks to further amend notification No. 12/2012-Customs dated 17.03.2012

    Date: 22-09-2016
    Service Tax Notification No. 41/2016 (ST)
    Seeks to exempt taxable service provided by State Government Industrial Development Corporations/ Undertakings by way of granting long term (thirty years, or more) lease of industrial plots to industrial units from so much of service tax which is leviable on the one time upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable for such lease.

    Date: 22-09-2016
    DGFT Public Notice No. 32/2015-2020
    Merchandise Exports from India Scheme (MEIS)-Additions/amendments in Table 2[containing ITC (HS) code wise list of products with reward rates] of Appendix 3B

    Date: 21-09-2016
    Instruction
    Instruction issued by Legal Cell, CBEC regarding non compliance of sub-section 2 of section 32K of Central Excise, Act, 1944 - Immunity granted to a person from prosecution, penalty and fine



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