Special Economic Zone or SEZ are dedicated geographical regions present in a country, providing businesses with simpler tax and legal compliance. In a manner of saying, SEZ can be considered as a Trade Capacity Development tool, which has been established to boost the economic growth of the nation.
The SEZs are deemed as foreign territory for trading operations and taxation purposes, i.e. any goods or services supplied to the SEZ shall be treated as Zero-Rated supply and attract 0% GST. Conversely, any supply made from the SEZ shall be treated as a normal supply and normal GST rates, as applicable, may apply on such transactions.
In India, prior to the implementation of SEZ, Export Processing Zones (EPZ) were being established for similar gains. However, on account of the infrastructural and bureaucratic challenges faced by EPZ, SEZ was introduced in India on April 1, 2000.
The specific clause (za) of Section 2 provides that Special Economic Zone in GST means each Special Economic Zone (SEZ) notified under the proviso to sub-section (4) of section 3 and sub-section (1) of section 4 (including Free Trade and Warehousing Zone) and includes an existing Special Economic Zone (SEZ).
As per the SPECIAL ECONOMIC ZONES ACT, 2005, SEZ Developer means a person who, or a State Government which, has been granted by the Central Government a letter of approval under sub-section (10) of section 3 and includes an Authority and a Co-Developer (the Developer or Co-Developer shall have at least twenty-six percent of the equity in the entity) to create business, residential or recreational facilities in a Special Economic Zone in case such development is proposed to be carried out through a separate entity or a special purpose vehicle being a company formed and registered under the Companies Act, 1956 (1 of 1956).
The Prime objective for the implementation of SEZ was to augment the foreign investment in the country while providing an internationally competitive & hassle-free environment for the exporters in India. The presence of SEZ in a country not only promotes export from a country but also ensures a level playing ground for domestic enterprises and manufacturers, for them to be able to scale to the global competition.
Establishing an SEZ requires massive development program, for which the government requires a huge amount of funds. In order to fulfil these requirements, the government seeks potential partners to tie up. In such scenarios, the government is benefited with the financial capabilities and domain expertise of their partners. On the other hand, the partnered organisation enjoys the right to market and perks of SEZs relaxed tax laws to increase their revenue-generating capacity. Leading to a win-win situation for both the parties involved.
The following exemptions are available for SEZ Developers:- 1. Payment of Customs duty for goods or services imported into SEZ for its operations and goods exported or services provided from SEZ outside India. 2. Payment of Excise duty for goods brought from Domestic Tariff Area to SEZ for its authorized operations. 3. Provided the SEZ is operationalized by 31.03.2017, developers are exempted from payment from Income Tax under the Income Tax Act as per rules in force, as follows:- Income Tax exemption for a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act. Block of 10 years will be selected at the discretion of the developer 4. Payment of Central Sales Tax for its authorized operations. 5. Payment of Service Tax under Chapter V of the Finance Act 1994 on taxable services consumed for its authorized operation. 6. Payment of VAT for the purchases made within the State of Tamil Nadu under TN VAT Act.
1. Payment of customs duty for goods or services imported into SEZ for its operations and goods exported or services provided from SEZ outside India. 2. Payment of Excise duty for goods brought from Domestic Tariff Area to SEZ for its authorized operations. 3. Provided that the unit commences commercial operations by 31.03.2020, SEZ Units are exempted from payment from Income Tax and other taxes under the Income Tax Act as per rules in force, as follows:- 100% Income Tax exemption 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. Income tax benefit as mentioned above is available on the profits out of exports made out of India. 4. Payment of Central Sales Tax for its authorized operations. 5. Payment of Service Tax under Chapter V of the Finance Act 1994 on taxable services consumed for its authorized operation. 6. Payment of VAT for the purchases made within the State of Tamil Nadu under TN VAT Act. 7. Units are also entitled for MEIS/SEIS scrips subject to fulfilment of eligibility criteria prescribed for the scrips.
IRIS GST, one of the leading GST Suvidha Provider (GSP) in India, is a one-stop solution for your GST Compliance (IRIS Sapphire) and E-way bill (IRIS Topaz) related issues. For any queries or to know more about our GST Compliance solutions, kindly drop us a mail at [email protected]
Bhavika is Customer Success Manager for IRISGST at IRIS Business. An ICWA, Bhavika comes with approx 9 years of experience in Compliance Reporting. She has been handling clients in Indian Markets since the GST mandate and has profound expertise in product functioning, GST filing and issue resolution. During leisure time, she loves traveling and likes to explore new places.
The pathetic state of the exports from the SEZ is assessed by the number of non-operative units and the poor capacity utilisation of the SEZ units information of which is in public and national interest The planning of the GOI is highlighted by the fact that the GOI has done no benchmarking of the operations of the SEZ per se, and the SEZ units within for each sector with comparable peersl,in India and the global competition If a sector, say X,exists in a SEZ in a specific maritime geography and its global export hub,is in Country A, and the GOI has not been benchmarking the operating parameters of the Indian SEZ and the SEZ units of that sector (X),every 3 years then the said SEZ units in sector X,in India,will definitely cease to exist,or be in a state of terminal decline or exist at the mercy of competitors With the miserable performance of the Indian Rupee,and its impact of reduction in Dollarised Rupee costs payable to the SEZ authority by the SEZ units why are the exports from the SEZs still a failure In addition, in several sectors, the rupee costs paid by the SEZ units to the SEZ Authority,are not the determinant for operating and financial viability of the SEZ units In essence,the GOI has utterly failed to provide a level playing field to exporters in this nation,in terms of admin costs,operating cost neutrality,financing costs,effective logistics costs and fiscal red tape and procedures The centres of manufacturing excellence near SEZs (For CMT/Job work/Material and Labour sourcing) are not cost effective as there is no synergy between the SEZ and the Industrial planning and policy The strategy of the GOI is highlighted by the fact that the GOI has engaged no 3 rd party to analyse the inefficiency of the operating parameters of the SEZ , per se, and the SEZ units within the SEZ for each sector within it , with comparable peers in India,and the global competition What planning and strategy will the GOI do,if it has no formal analysis of the specific operating costs,parameters,management and other issues,which explain the dismal state of the SEZ units by sector,scale and management quality The dismal state of the GOI planning is that the GOI has not properly planned the sector profile of the units in each SEZ, to ensure that the right sectors are in the appropriate geography,in the right SEZ,to minimise the net logistics costs on the EXIM chain, and minimise the inward material logistics costs considering the future dislocations in inward and external material sources and options of transhipment and alternative export markets Several SEZs invest limited equity in SEZ units and common service providers,like banks,facilities,hotels,accounting firms etc,as a demonstration of their stake in the SEZ and their strategic inputs in the planning and operation of the same which is then used to lower the lease charges etc which is completely absent in India All of the above is to be seen in light of the fact that the SEZ has no data of the financial or operating performance of the SEZ units,loss making units or even the financial and operating performance of the Developers of the SEZ and is naturally not concerned with the losses or the financial performance of the SEZ units therein The peculiar pattern of CMT and Job workers of key sectors such as Gold and Diamond jewellers,with multiple movement of stocks at different processors o/s the SEZ is not the norm for Gems and Jewellery SEZs or SEZ units and represents an abnormal industrial agglomeration with a planned and structural dislocation in manufacturing and processing operations which cannot be solely for the purposes of manufacturing and commercial efficiency. Information on raids and prosecutions is critical especially in sectors with high import duties (on merit mode) for inputs,customised finished goods (wherein DRI/Customs cannot assess over invoicing),frequent movements to and from 3 rd party processors (which makes the case for wastages and losses in SION and disappearing materials), materials where the EXIM transit time is a few hours and the logistics costs are less than 1% of CIF/FOB rates, inputs and outputs with marked diferences in rates of different grades of items and offgrades,per se,warehousing artificial losses,amortisable costs ,bad debts and write offs in select SEZs (to be used for 3rd party exports or mergers to obviate tax on SEZ profits),items where the SEZ units are well aware of the sampling and test checks of the DRI and Customs at the SEZ for the inputs and outputs etc. The Gems and Jewellery industry is run by cartels from a particular community spread from Western India to North America,EU,East Asia,West Asia and Africa and is a well coordinated money laundering and smuggling operation from the state of rough diamonds and raw gold,to the marketing of jewellery and warehousing of processed and raw diamonds,the banking chain,raters and the chain of associate and front companies which is all the more insidious,as all the data with DRI/ED/Customs/Interpol used by the Indian State for surveillance is all origined from the overseas counterparts and partners of the Indian traders located in India (Who are in many cases in spirit the same de facto entity owners) The premise that Indians are the least cost labour source for the jwellery sector and their informal working style (w/o documentation,using informal labour and in slum style conditions) is an innovative marvel of Indian Genius,is a pathetic fraud and deception,and the entire array of fiscal and monetary sops for this sector (including SEZ) Allows the sector to generate financial buffers via money laundering,tax arbitrage,treasury operations, merchanting exports,accomodation financing ,cash financing, alternative fund transfers,FX speculation,leveraging double and layered financing,defrauding Indian Merchant exporters such as STC and MMTC,Credit insurance fraud etc. which provide the sector the pricing edge in overseas markets ( via illegal,nefarious and fraudulent means)
The difference between RAM (Random Access Memory) and ROM (Read Only Memory) is explained here in detail. RAM is a form of computer memory that can be read and changed in any order, typically used to store working data and machine code.ROM is a type of non-volatile memory used in computers and other electronic devices. The difference between RAM vs ROM will help in understanding the basics better and know their comparisons thoroughly.
After learning about the RAM and ROM difference, visit the below-given links to know the details of the National Cyber Security Policy, Cybercrime, Cybersecurity, and Artificial Intelligence thoroughly. Also, visit the link on the Weekly Current Affairs Quiz.
We're sorry, but this browser is not supported by TopperLearning. To get the best experince using TopperLearning, we recommend that you use Google Chrome. Continue, I understand this browser is not compatible.