11 February 2023
Dear experts is income tax exemption applicable if SEZ unit relocate from One SEZ to anthoer SEZ or should we get new SEZ certificate from the relocated SEZ ( i.e Visakhapatnam)
10 July 2024
When a Special Economic Zone (SEZ) unit relocates from one SEZ to another SEZ within India, certain provisions under the Income Tax Act and SEZ Rules apply:
1. **Transfer of Eligibility for Tax Benefits:** - Income tax benefits, exemptions, and concessions available to SEZ units under Section 10AA of the Income Tax Act are tied to the SEZ in which the unit is located and operates. - If a SEZ unit relocates from one SEZ (say SEZ A) to another SEZ (say SEZ B), the eligibility for income tax exemptions under Section 10AA may not automatically transfer to the new SEZ (SEZ B).
2. **Procedure for Relocation:** - Typically, when a SEZ unit decides to relocate to another SEZ, it needs to follow the procedure prescribed by the respective SEZ authorities and notify them about the relocation. - The SEZ unit may need to surrender its existing SEZ certificate issued by SEZ A and apply for a fresh SEZ certificate from SEZ B.
3. **Income Tax Exemption and SEZ Certificate:** - Income tax benefits under Section 10AA are contingent upon the SEZ unit operating in a notified SEZ and fulfilling other conditions prescribed under the law. - Upon relocation, the SEZ unit should apply for a new SEZ certificate from the SEZ authorities of SEZ B. This new certificate will establish the SEZ unit's eligibility to claim income tax exemptions in the new SEZ.
4. **Impact on Tax Exemption:** - If the SEZ unit relocates without obtaining a new SEZ certificate from SEZ B, it may jeopardize its eligibility for income tax exemptions under Section 10AA. - It is crucial for the SEZ unit to ensure compliance with SEZ rules and Income Tax provisions during and after relocation to continue availing tax benefits.
5. **Consultation with Tax and SEZ Authorities:** - It is advisable for the SEZ unit to consult with tax advisors and SEZ authorities to understand the specific requirements, procedures, and implications of relocating to another SEZ. - Proper documentation, including surrender of old SEZ certificate and obtaining a new SEZ certificate, is essential to maintain continuity in availing income tax benefits.
In summary, income tax exemptions under Section 10AA for SEZ units are linked to the SEZ in which the unit is registered and operates. Relocating to another SEZ requires obtaining a new SEZ certificate from the relocated SEZ to continue availing these exemptions. Proper compliance with SEZ rules and Income Tax Act provisions is crucial to avoid any loss of tax benefits during and after the relocation process.
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