For setting up a manufacturing, trading or service units in SEZ, 03 copies of project proposal in the format prescribed at 'Form F' of the SEZ Rules, 2006 to be submitted to the Development Commissioner (DC) of the SEZ.
Approval Mechanism
All approvals to be given by the Development Commissioner. Clearance from the Board of Approvals wherever required will be obtained by the Development Commissioner, before the Letter of Permission/Letter of Intent is issued.
Policy on Special Economic Zone (SEZ) Units
A new Special Economic Zone (SEZ) scheme has been introduced in Special Economic Zone Rules from 10.02.2006, with a view to provide an internationally competitive and hasslefree environment for export production.
Obligation of the unit under the Scheme
(i) SEZ units have to achieve positive net foreign exchange earning and for this purpose, a Bond-cum-Legal Agreement is required to be executed by the unit with the Development Commissioner & Dy. Commissioner of Customs jointly..
(ii) The units have to provide annual reports to the DC, SEZ and Zone Customs in prescribed format given in Form-1 of SEZ Rules.
Salient Features and facilities to SEZ Units
A designated duty free enclave and to be treated as foreign territory for trade operations and duties and tariffs.
No licence required for import.
Exemption from Customs duty on import on capital goods, raw materials, consumables, spares etc.
Exemption from Central Excise duty on procurement of capital goods, raw materials, consumable spares etc. from the domestic market.
Supplies from DTA to SEZ units treated as Deemed Exports. Domestic supplier may claim DEPB in lieu of drawback, provided payments for the supply are made from Foreign Exchange account of the unit..
Exemption of Central Sales Tax on domestic purchases against Form-I.
100% tax exemption for 05 years and 50% for next 05 years thereafter, and 05 years of the ploughed back export profit for next five years.
SEZ units may be for manufacturing, trading or service activity.
SEZ units to be positive net foreign exchange earner to be cumulatively for a period of five years.
Performance of the units to be monitored by an Approval Committee headed by the Development Commissioner and consisting of Customs.
100%FDI in manufacturing sector allowed through automatic route barring a few sectors.
Facility to retain 100% foreign exchange receipts in EEFC Account.
Facility to realize and repatriate export proceeds within 12 months.
Re-export imported goods found defective, goods imported from foreign suppliers on loan basis etc. without G.R. Waiver with the permission of the Development Commissioner.
Overseas investment by SEZ units from EEFC account through automatic route.
Release of foreign exchange to DTA units to buy goods from units in SEZs.
Facility to setup offshore banking units.
No cap on foreign investments for SSI reserved items.
Exemption from industrial licensing requirement for items reserved for SSI sector.
Profits allowed to be repatriated freely without any dividend balancing requirement.
Domestic Sales on payment of full duty subject to import policy in force.
No fixed wastage norms.
Full freedom for subcontracting including subcontracting abroad.
Subcontracting facility available to jewellery units.
Duty free goods to be utilized in 05 years.
Job work on behalf of domestic exporters for direct exports allowed.
No routine examination by Customs of export and import cargo.
No separate documentation required for Customs and Foreign Trade Policy.
In-house Customs clearance.
Support services like banking, post office, clearing agents etc. provided in Zone complex.
Developed plots and ready-to-use built-up space.
Exemption from Customs / Excise Duty for import / domestic procurement of goods for setting up units in the zone.
Positive net foreign exchange requirement in SEZ units mandates bond agreement and annual reporting to the Development Commissioner. SEZ units must obtain Development Commissioner approval by submitting the prescribed project proposal; the DC issues Letters of Permission/Intent and monitors performance via an Approval Committee with Zone Customs. Units must meet a
positive net foreign exchange earning obligation, execute a Bond cum Legal Agreement with the DC and Deputy Commissioner of Customs, and provide annual reports in the prescribed format. Incentives include customs and excise exemptions for imports and domestic procurement, deemed export treatment for DTA supplies, in house customs clearance, EEFC retention, liberal repatriation and FDI policies, and subcontracting freedoms.
TaxTMI 
AI Drafter ✕
TaxTMI 
