Advantages and dis advantages of special economic zone
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Advantages
15 year corporate tax holiday on export profit – 100% for initial 5 years, 50% for the next 5 years and up to 50% for the balance 5 years equivalent to profits ploughed back for investment.
Allowed to carry forward losses.
No licence required for import made under SEZ units.
Duty free import or domestic procurement of goods for setting up of the SEZ units.
Goods imported/procured locally are duty free and could be utilized over the approval period of 5 years.
Exemption from customs duty on import of capital goods, raw materials, consumables, spares, etc.
Exemption from Central Excise duty on the procurement of capital goods, raw materials, and consumable spares, etc. from the domestic market.
Exemption from payment of Central Sales Tax on the sale or purchase of goods, provided that, the goods are meant for undertaking authorized operations.
Exemption from payment of Service Tax.
“Write-off” of unrealized export bills is permitted up to an annual limit of 5% of their average annual realization.
No routine examination by Customs officials of export and import cargo.
Setting up Off-shore Banking Units (OBU) allowed in SEZs.
External Commercial Borrowings up to $ 500 million a year allowed without any maturity restrictions.
Enhanced limit of Rs. 2.40 crores per annum allowed for managerial remuneration.
Disadvantages
Revenue losses because of the various tax exemptions and incentives.
Many traders are interested in SEZ, so that they can acquire at cheap rates and create a land bank for themselves.
The number of units applying for setting up EOU's is not commensurate to the number of applications for setting up SEZ's leading to a belief that this project may not match up to expectations.
15 year corporate tax holiday on export profit – 100% for initial 5 years, 50% for the next 5 years and up to 50% for the balance 5 years equivalent to profits ploughed back for investment.
Allowed to carry forward losses.
No licence required for import made under SEZ units.
Duty free import or domestic procurement of goods for setting up of the SEZ units.
Goods imported/procured locally are duty free and could be utilized over the approval period of 5 years.
Exemption from customs duty on import of capital goods, raw materials, consumables, spares, etc.
Exemption from Central Excise duty on the procurement of capital goods, raw materials, and consumable spares, etc. from the domestic market.
Exemption from payment of Central Sales Tax on the sale or purchase of goods, provided that, the goods are meant for undertaking authorized operations.
Exemption from payment of Service Tax.
“Write-off” of unrealized export bills is permitted up to an annual limit of 5% of their average annual realization.
No routine examination by Customs officials of export and import cargo.
Setting up Off-shore Banking Units (OBU) allowed in SEZs.
External Commercial Borrowings up to $ 500 million a year allowed without any maturity restrictions.
Enhanced limit of Rs. 2.40 crores per annum allowed for managerial remuneration.
Disadvantages
Revenue losses because of the various tax exemptions and incentives.
Many traders are interested in SEZ, so that they can acquire at cheap rates and create a land bank for themselves.
The number of units applying for setting up EOU's is not commensurate to the number of applications for setting up SEZ's leading to a belief that this project may not match up to expectations.
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Advantage: Allowed to carry forward losses. • No licence required for import made under SEZ units. •Exemption from payment of Service Tax. • No routine examination by custom officials of export and import cargo. •Enhanced limit of Rs.2.40 crores per annum allowed for managerial remuneration.
Disadvantage
• Revenue losses because of the various tax exemptions and incentives.
• Many traders are interested in SEZ, so that they can acquire at cheap rates and create a land bank for themselves.
Disadvantage
• Revenue losses because of the various tax exemptions and incentives.
• Many traders are interested in SEZ, so that they can acquire at cheap rates and create a land bank for themselves.
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