A Special Economic Zone (SEZ) is a designated geographical area within a country that is outside the customs territory of India. The activities of SEZs and their units are governed by the provisions of the Special Economic Zone Act, 2005 and the Special Economic Zone Rules, 2006. SEZ Unit is a unit set up inside the SEZ by an entrepreneur or businesses engaged in manufacturing, trading, or service activities. These Units benefit from the various incentives and facilities provided within the SEZ framework. Domestic Tariff Area (DTA) means the whole of India (including the territorial waters and continental shelf) but does not include the areas of the SEZs.
SEZ SCHEME
There are various fiscal incentives offered under the SEZ framework to the SEZ units:
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Exemption from any customs duty or excise for import or procurement of goods into the Unit from the DTA;
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Exemption from any customs duty for the export of goods from the Unit to any place outside India;
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Benefits of duty drawback in case of goods and services provided to Units from a DTA;
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Supply of goods and services by DTA to Units are treated as exports; Supply of goods and services by Units to DTA are treated as imports and are subject to customs duties just like in the case of normal imports to India.
We at CCC will assist you in:
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Establishment of SEZ
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Setting up of SEZ Units
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Preparation and filing of application with the concerned office of SEZ.
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Documentation, representation and coordination with the relevant authorities to get the approval of SEZ unit
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Compliance Requirements
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Exit of SEZ Unit
A SEZ is a designated geographical area within a country that is outside the customs territory of India. The activities of SEZs and their units are governed by the provisions of the Special Economic Zones Act, 2005 (“SEZ Act”) and the Special Economic Zones Rules, 2006 (“SEZ Rules”). An SEZ Unit (“Unit”) is a unit set up inside the SEZ by an entrepreneur or business engaged in manufacturing, trading, or service activities. These Units benefit from the various incentives and facilities provided within the SEZ framework.
What is a Special Economic Zone (SEZ) and an SEZ Unit?
DTA, as defined in the SEZ Act, means the whole of India (including the territorial waters and continental shelf) but does not include the areas of the SEZ. Hence, all the territory outside the SEZ is the DTA.
What is meant by Domestic Tariff Area (DTA)?
As per Chapter 6 of the SEZ Act, the various fiscal incentives offered under the SEZ framework are as follows:
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Exemption from any customs duty or excise for import or procurement of goods into the Unit from the DTA;
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Exemption from any customs duty for the export of goods from the Unit to any place outside India;
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Benefits of duty drawback in case of goods and services provided to Units from a DTA;
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Exemption from sales tax or service tax on taxable services provided to Developers or Units;
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Single-window clearance for Central and State level approvals;
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Supply of goods and services by DTA to Units is treated as exports; and
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Supply of goods and services by Units to DTA is treated as imports and is subject to customs duties just like in the case of normal imports to India.
What are the various incentives/benefits available to the Units or Developers in SEZs?
Yes, as per Rule 18 of the SEZ Rules, the following conditions must be fulfilled to seek approval from the Approval Committee:
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The proposal meets the positive net foreign exchange earning requirement;
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There is availability of space and other infrastructure support;
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The applicant undertakes to fulfill the environmental and pollution control norms;
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The applicant submits proof of residence to the DC;
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The applicant submits (a) income tax returns in the case of a partnership; or (b) audited balance sheets for the last 3 years in the case of a company.
Are there any conditions to be met to get approval for setting up an SEZ Unit?
Any person intending to establish a unit for manufacturing goods or providing services within a SEZ is required to submit a proposal to the relevant DC. Upon receiving the proposal, the DC must forward it to the Approval Committee for evaluation and decision. This decision-making process must be completed within 15 days from the date of receiving the proposal.
How are SEZ Units set up in India? What is the application procedure for setting up an SEZ?
Yes, SEZ units can sell their exports in the Domestic Tariff Area (DTA), but they must pay:
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Customs duty on the goods sold
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GST and other applicable taxes
Can an SEZ unit sell goods and services in India’s Domestic Tariff Area (DTA)?
To learn more about SEZs, check out our detailed guide
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