Special Economic Zone(SEZ)

Special Economic Zone (SEZ)  are duty-free enclaves  deemed as foreign territory for the purposes of trade operations and duties and tariffs. In order words, SEZ is a geographical region that has economic laws different from a country's typical economic laws. Usually the goal is to increase foreign investments. SEZs have been established in several countries, including China, India.

Salient features of SEZ are

• Exemption from minimum alternate tax under section 115JB of the Income Tax Act.
• External commercial borrowing by SEZ units upto US $ 500 million in a year without any maturity restriction through recognized banking channels.

• Exemption from Central Sales Tax.

• Exemption from Service Tax.

• Single window clearance for Central and State level approvals.

• Exemption from State sales tax and other levies as extended by the respective State Governments

• No routine examination from custom authorities

• 100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.

Sgnificance and performance(substantiate):

-The total investment in SEZs is 2 lakh crores till Sep 2012

-100% FDI allowed in SEZs thru automatic route

-total 160 SEZs exporting(of which majority is IT/Ites Exports)

-Physical exports worth 3 lakh crore in 2010-11

-More than 9 laks employment have been created.