Sez benefits

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Laxmikant Balasaheb Sawant

Laxmikant Balasaheb Sawant (Querist)
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02 August 2015 Can any one guide me on tax exemption in SEZ area of which taxes are applicable?

Arpit Shah

Arpit Shah (Expert)
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03 August 2015 Special Tax Benefits and Facilities in SEZs

Special tax benefits/facilites are offered to Special Economic Zones (SEZs) in the country. They include:
I. Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units.
II. 100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for the next 5 years thereafter and 50% of the ploughed back export profit for next 5 years;
III. Exemption from minimum alternate tax under section 115JB of the Income tax Act;
IV. External commercial borrowing by SEZ units up to US $ 500 million in a year without any maturity restriction through recognized banking channels.
Facilities offered to Developers:
(a) Exemption from customs/excise duties for development of SEZs for authorized operations approved by the Board of Approvals.
(b) Income Tax exemption on income derived from the business of development of SEZs in a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act.
(c) Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act.
(d) Exemption from dividend distribution tax under Section 115 O of the Income Tax Act.
Position with regard to Service Tax benefits offered to SEZs/Developers are as under:
I. Any taxable service provided wholly within the SEZ is exempted an initio.
II. Taxable services provided outside the boundaries of SEZ but are for use of SEZ are exempted by way of refund i.e. tax has to be paid by the service provider but SEZ developer/unit can take refund of it.
III. SEZ units providing taxable service to DTA units are subjected to normal service tax.
IV. Like any other service provider taxable services exported out of SEZ are not chargeable to service tax.

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