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IT Company in SEZ

R (UnDisclosed) (57 Points)

18 January 2010

Dear Experts ,

We are planning to move our small Product Based IT Company into SEZ , I want to know the various taxation applicable when Sale is commenced from SEZ Unit

1 Export of Service To Other Country

2 Export of Packaged Software to Other Country

3 Sales of Services within India

4 Sales of Packaged Software within India

5 A Sale of Services based on SaaS (Software as a Service ) to both within India and Outside India ( Where subscriber of the Service pays a monthly rental to software company for usage of software and hardware infrastructure )

Thanks in Advance

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3 Replies

RAMESH KUMAR VERMA ( CS PURSUING ) (43853 Points)
Replied 19 January 2010

dear r,

please noted that

Tax Benefits

Tax benefits available to SEZ developers include:-

Exemption from customs/excise duties for development of SEZs for authorized operations approved by the BOA.

Supplies from DTA to SEZ shall be exempt from payment of any Central Excise duty under Rule 19 of Central Excise Rules, 2002. Similarly, such supplies shall be eligible for claim of rebate under Rule 18 of Central Excise Rules, 2002 subject to the fulfillment of conditions laid there under. The provisions relating to exports under Central Excise Act, 1944 and rules made there under may be applied, mutatis-mutandis, in case of procurement by SEZ units & SEZ developer from DTA for their authorized operations

List of usefull links:-

Section 10 (AA) of the ITA allows any SEZ unit which begins operations on or after April 1 2006 to make tax deductions equivalent to 100% of its income generated for a period of five consecutive assessment years from the time the SEZ unit commences operations, 50% for the next five assessment years, and tax deductions not exceeding 50% of the ploughed-back profits for the following five assessment years.
Section 80-IA of the Income Tax Act.

https://incometaxindia.gov.in/Notifications/Incometaxact/2002/N_No_S.asp

Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act.

https://incometaxindia.gov.in/circulars/2001/circular2001-13.asp

Exemption from dividend distribution tax under Section 115O of the Income Tax Act.
Exemption from Central Sales Tax (CST) on inter-state purchase of goods

No CST if sale to SEZ - Sections 8(6), 8(7) and 8(8) have been incorporated to provide that inter state sale made to a unit in SEZ (Special Economic Zone) will be exempt from CST. The purchasing dealer has to submit a declaration in prescribed form. Consequential amendment is made by inserting section 13(1)(aa) to authorize Central Government to make rules to provide form and manner of furnishing declaration u/s 8(8). [CST Rule 12(10)(a) has have been subsequently amended on 16-1-2003. It is provided that SEZ unit will supply H form duly countersigned and certified by authority specified by Central Government authorizing establishment of unit in SEZ, - Development Commissioner is the authority to allow setting up of SEZ unit]

https://dateyvs.com/cst01.htm

Exemption from service tax under Chapter-V of the Finance Act, 1994 on taxable services provided to a Developer or Unit to carry on the authorized operations in a Special Economic Zone

Ramesh kumar verma

1 Like

Swanand (CEO) (288 Points)
Replied 07 February 2010

1. Exports from SEZ to Other countires are totally duty free and you can also enjoy income tax holiday . ( visit www.sez-india.net for list of benefits and other information )

2. Same as 1

3. It will be treated as Imports to India and will attract duties as per normal customs law. No income tax benefit is available for Domestic sales .

you are allowed to do Domestic sale only after you attain Net Positive Foreign Exchange Performace.

4. Same as 3

5. Same as 1 for Exports & same as 3 for domestic cusotmers.

1 Like