Sale from sez to dta

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 September 2012
Understant all items can be imported in SEZ under 0% customs duty. But want to know what will be customs duties applicable on sale from SEZ to DTA?

Is there any % restiction on sale?

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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14 September 2012 Sales to DTA
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DTA sales can be undertaken subject to achievement of positive NFE. Net Foreign Exchange (NFE) shall be calculated cumulatively for a period of 5 years from the commencement of commercial production.

For the purpose of calculation, the value of imported capital goods shall be amortized as follows -
1st – 2nd year: 5% each year.
3rd – 5th year: 10% each year.
6th – 8th year: 20% each year

Exemption from capital gains on transfer of an industrial unit from urban area to a SEZ.

Drawback or such other benefit as may be admissible from time to time on goods and services admitted from the DTA for setting up, operation and maintenance of units.

All exports from the DTA to the Zone shall be exempt from state and local body taxes or levies as (In some states, exports made to educational institutions, hospitals, hotels, residential and / or commercial complexes, leisure and entertainment facilities or any other facilities as may be notified by the state government are not exempt).

Developers of SEZs may import or procure goods from DTA without payment of duty for development, operation or maintenance of SEZ.

Exemption from Central Sales Tax (CST) on supply of goods from the DTA for development, operation and maintenance of SEZs.

Income tax exemption for a block of 10 years in the first 15 years of operation.
Drawback or such other benefits as may be admissible from time to time on supply of goods from DTA for development, operation and maintenance of SEZs.
Investment income in the form of dividends, interest or long term capital gains, of an infrastructure capital company from investments made in an enterprise engaged in the development, operation or maintenance of a SEZ are exempt from tax.
Foreign investment permitted.
Service tax exemption on services provided to a developer or to a unit located in the SEZ region.
Any activity or transaction in the Zone, which is liable for entertainment duty under the Bombay Entertainments Duty Act, 1923 and Luxury Tax under the Maharashtra Tax on Luxuries Act, 1987 shall not be liable to such tax The fiscal benefits shall be applicable for a period of 25 years from the date of notification of the zone by the Government of India or such extended period as may be decided by the State Government.

With respect to each Special Economic Zone all such transactions between the Zones or within the Zone or both, including the transactions of land acquisition for development of the Zone between the developer or co-developer and land owners and land transactions between the developers or co-developers and the units, carried out after declaration of the Zone by the Government of India, shall be exempt from the following State taxes, cess and levies namely:
Purchase tax, Sales tax and Turnover tax
Specified sales (Lease tax) in respect of lease of goods
Stamp duty for the first transaction between the Developer or co-developer and the land-owner and the first transaction between the Developer or co-developer and the Units
Registration fee for the first transaction between the Developer or co-developer and the land-owner and the first transaction between the Developer or co-developer and the Units
Land assessment tax

Electricity duty and tax (Only for sales to Units in processing area)
Water pollution cess
Works Contract tax
State government shall –

Provide exemption from electricity duty or taxes on sale of self generated or purchased electric power for use in processing area of an SEZ.
Allow generation, transmission, distribution of power within a SEZ subject to the provisions of the electricity act.

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RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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14 September 2012 THANKS .

Salient features and facilities in SEZ
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1. A designated duty free enclave and to be
treated as foreign territory for trade
operations and duties and tariffs.
2. No license required for import.
3. Exemption from customs duty on import of
capital goods, raw materials, consumables,
spares etc.
4.Exemption from Central Excise duty on
procurement of capital goods, raw
materials,consumable spares etc. from the
domestic market.
5.Supplies from DTA to SEZ units treated as
deemed exports.
6.Reimbursement of Central Sales Tax paid on
domestic purchases.

6.100% income tax exemption for a block of five years, 50% tax exemptions for two years and up to 50% of the Profits ploughed back for next 3 years under section 10-A of Income tax Act.

7. Supplies from DTA to SEZ to be treated as exports under 80HHC of the IT Act.
8. Carry forward of losses

9. 100% Income-tax exemption for 3 years & 50% for 2 years under section 80-LA of the Income-tax Act for offshore banking units.
10.Reimbursement of duty paid on furnace oil, procured from domestic oil companies to SEZ units as per the rate of Drawback notified by the Directorate General of Foreign Trade. SEZ units may be for manufacturing, trading or service activity.
11.SEZ unit to be positive net foreign exchange earner within three years.
Performance of the units to be monitored by a Committee headed by Development Commissioner and consisting of Customs.
100% Foreign Direct Investment in manufacturing, sector allowed through automatic route barring a few sectors.
14.Facility to retain 100% foreign exchange receipts in EEFC Account.
15.Facility to realize and repatriate export proceeds within 12 months.
16.Re-export imported goods found defective, goods imported from foreign suppliers on loan basis etc. without G.R. Waiver under intimation to the Development Commissioner.
17."Write-off" of unrealized exports bills up to
5%.
18.Commodity hedging by SEZ units permitted
Capitalization of import payables.

19. No cap on foreign investment for SSI reserved
items.
20.Exemption from industrial
licensing requirement for items reserved for
SSI sector.
21.Profits allowed to be repatriated freely without any dividend-balancing requirement.
22.Domestic Sales on full duty subject to import policy in force.

23.No fixed wastage norms.
24.Full freedom for subcontracting including subcontracting abroad. Subcontracting facility available to jewellery units.
25.Duty free goods to be utilized in 5 years.
26.Job work on behalf of domestic exporters for direct export allowed.
27.No routine examination by Customs of exports
and import cargo.
28.No separate documentation required for customs and Exim Policy.

29.In house customs Clearance.
30. Support services like banking, post office clearing agents etc. provided in Zone Complex.
Developed plots and ready to use built up space
32 Exemption from Custom/Excise Duty on goods for setting up units in the zone.

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