SEZ

Stands for Special Economic Zone. It is a well defined / demarcated area which can be as small as 25 Acres (Sector specific SEZ) or as large as 12500Acres (Multi product SEZ). These areas are considered outside the purview of the normal customs and excise norms applicable to rest of India but are taxed and governed as per the SEZ Act 2005 of Government of India.

Hence they are able to provide the requisite legal and administrative framework for the following:
1.   Less regulatory and bureaucratic hurdles.
2.   Maximum tax relaxation as permissible under any Act as on date in India.

The tax benefits are available at all three stages - Pre construction, Construction, Production and Import/export stage. Tax exemptions are available on operation and maintenance and income generated from SEZ operations. The zone may most likely be located near a Sea port or dry port to facilitate exports at low transaction cost. The Government of India has provided exemptions from taxes to entrepreneurs who setup their manufacturing, trading or services business inside these areas/ Zones for export purposes.

The tax breaks are on the same lines as are available in free trade zones in Dubai or export promotion zones of China and Malaysia etc. including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others.

The official definition of SEZ as per the Government of India is:
Specifically delineated duty free enclave and shall be deemed to be foreign territory for the purposes of trade operations, duties and tariffs. Usually the goal of a SEZ is to increase foreign investment. Increase exports of non- traditional items. Units in SEZs are allowed to sell in domestic market also after paying the requisite taxes.

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NOTIFIED SEZ

Approval of a developer as "credible" and land for SEZ being "unencumbered" starts with application to the Board of Approvals, by the proposed developer in a detailed form - Form A.

As per the SEZ Act 2005 of the Government of India, the approval stages involved in their order of occurrence, are:

1.   In-principle approval

2.   Formal approval

3.   Notification of SEZ

Only after Notification of SEZ stage has been achieved, the clients / units of SEZ can start constructing and are eligible for SEZ tax exemptions.

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Who should establish in a SEZ?

SEZ provides an enormous opportunity to companies to improve efficiency and also save on taxes and duties levied by the government.

However, there are certain conditions, which one must be aware before establishing in a SEZ:   

1.   Manufactured goods / services should primarily be meant for exports

2.   SEZ unit must become Net-Foreign exchange earner. If these primary conditions are fulfilled, then a
      manufacturing / Research base in SEZ would help bring down the cost of operations to a large extent.

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Benefits

1.   Duty-free import / export of goods & services during Construction, Operation & Maintenance of unit by the
      entrepreneur

2.   Income tax exemptions

3.   Stamp duty waiver

4.   Exemption from Minimum Alternate Tax (MAT), Central Sales Tax (CST) and Service Tax

5.   Access to International funds and interest rates

6.   Full freedom for subcontracting including subcontracting abroad

7.   Job work on behalf of domestic exporter

8.   Foreign Direct Investment allowed through automatic route

9.   Other incentives as applicable from State Government of Maharashtra

10. In-house customs clearance

11. Single window clearance for state and central government level approvals through the office of the Development
      Commissioner

12. Export and import of cargo on self-certification basis

13. Freedom to sell in Domestic Tariff Area

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Finance Option

The State Bank of Bikaner and Jaipur will provide finance options on a priority basis, to all units interested in locating to Inspira Pharma SEZ.