Exports to third parties by SEZ Unit and 10AA

[Rajendra Prasad]

Dear Sir,

As per SEZ act , exports by third parties are to be treated as exports. Am I eligible to claim 10AA deduction ?

Please clarify

[Malay pota]

Yes,if the following condition of section 10AA of the Income Tax Act are fulfilled.

Entrepreneur should be covered within the provisions of section 2 (j) of the Special Economic Zone Act, 2005;

SEZ unit should have commenced its manufacturing activity or provision of service, as the case may be, during the previous year relevant to any assessment year commencing on or after 1st April, 2006;

SEZ unit is not formed by any splitting up, or the reconstruction of the business that is already in existence.

SEZ unit is not formed by any transfer of plant or machinery, previously used for any purpose, to a new business.

Units who have already enjoyed benefit of deduction under section 10A of the Income Tax Act for a continuous period of 10 years are not eligible to claim deduction under section 10AA of the Act.

[Rajendra Prasad]

Dear Sir,

Whether the third party exports are eligible to claim benefit u/s 10AA. IN third party exports , we will receive INR from the exporter.

Unit is eligilble to claim Exemtpion U/s 10AA as it is not meeting the criteria to claim benefit u/s 10AA.

Please clarify.

[Malay pota]

You can avail benefit of section 10AA of the IT Act even if remittance is in INR because section specifies export turnover and not realization in FCY.

No you can not claim benefit of section 10AA of IT Act if you do not fulfill the conditions stipulated.

AI Summary

Eligibility for 10AA Deduction Under SEZ Act Clarified: Key Conditions and INR Payment Acceptance Explained A participant inquired whether exports by third parties qualify for a 10AA deduction under the SEZ Act. A respondent clarified that eligibility depends on meeting specific conditions: the entrepreneur must fall under section 2(j) of the SEZ Act, the SEZ unit must have started operations after April 1, 2006, and it must not be formed by restructuring existing businesses or using old machinery. Additionally, units that have already claimed a 10A deduction for 10 years are ineligible. Another response confirmed that benefits can be claimed even if payments are received in INR, provided all conditions are met.