Understanding Special Economic Zone
A special economic zone (SEZ) is a dedicated zone wherein businesses enjoy simpler tax and legal compliance. SEZs are located within a country’s national borders, however, they are treated as a foreign territory from taxability perspective.
Some of their key objective include:
To promote entrepreneurs to set up units in these Economic Zone, various attractive financial policies have been established. These policies include promotional offers and simplicity in investing, taxation, trading, quotas, customs and labor regulations. Moreover, units set up in these zones are offered special tax holidays.
The term special economic zone can further include:
As per the legal definition, A Special Economic Zone (SEZ) is a geographically bound zone where the economic laws relating to export and import are more liberal as compared to other parts of the country. Within SEZs, a unit may be set-up for the manufacture of goods and other activities including processing, assembling, trading, repairing, reconditioning, making of gold/silver, platinum jewelry etc. SEZ units are considered to be outside the customs territory of India. All supplies made to a unit operating in SEZ are considered as Export out of India. Goods and services rendered from SEZ to normal territory is considered as Import of such goods or services.
Some of the incentives and facilities available to SEZ developers include:
Click Here to view other policies established by Government of India for the operation of Special Economic Zones in India.
To read further on impact of GST on SEZ, Click Here.