Master TDS & TCS Provisions with Critical Issues. Register Now!

SEZ detail for Tax Examption

Tarun (Engineer) (49 Points)

30 December 2007

I have a unit in POR Baroda and I am doing Manufacturing and Spare machining activity for S.E.Forge company in Vagodia,Baroda which is registered under SEZ.

Now I want to know weather I have to charge Local Sales Tax (VAT) on direct sale items to SEForge? If not than under which government rule it was exampted (Give Documentation web link).

I am also doing Labour work for SEForge (machining of spares supplied by SEForge on gate pass at our works). Now at the time of invoiceing weather I have to charge Service Tax in invoice? If not than under which government rule it was exampted (Give Documentation web link).

Your valuable responce is highly appreciated. Also Please send your message to my email : patel_tarun @ rediffmail.com

Tarun Patel

Baroda., Gujarat

Reply
Follow
Share

4 Replies

Late CA Sampat Jain (Chartered Accountant) (4772 Points)
Replied 30 December 2007

Customs Since import by SEZ units is not covered under the Customs Act, 1962, such units can procure goods from any country without paying customs duty, anti-dumping duty, countervailing duty (CVD), etc. Thus, location in SEZ is very beneficial to companies heavily dependent on imported raw materials or capital equipment. Normal customs duty is levied on movement of goods manufactured by SEZ unit. However, CVD is not levied. SEZ units are also benefited as import-export do not have face the procedural hassles with the customs authority. No License is required for imports, including second hand machineries. DTA units selling goods to SEZ units are deemed to have exported goods under new Chapter XA of the Customs Act, 1962. They are accordingly eligible for all exports benefits such as duty drawback, DEPB entitlement, etc. Excise Under the amended section 3 of the Central Excise Act, 1944, SEZ units are beyond the scope of levy of excise duty. Thus, provisions of excise law are not applicable to goods manufactured by an SEZ unit on or after 15th August, 2003. It may be appreciated here that this is not an exemption from a duty otherwise leviable. The duty will not be leviable at all. DTA units selling goods to SEZ units are eligible for exemption from excise duty under Notification No. 58/2003 dated 22nd July, 2003. Thus, SEZ units can procure goods without payment of excise duty. Income Tax SEZ units are eligible to deduction u/s 80-IA and exemption u/s 10A. The two, however, cannot be claimed simultaneously. DTA units selling to SEZ units are eligible for tax breaks, including deduction u/s 80HHC, just as in case of other exports. Income earned by infrastructure capital company/fund on investments in SEZ is fully exempt from tax u/s 10(23G). Investments made by individuals and HUFs in issues of shares and debentures by SEZ units qualify for additional rebate u/s 88. Sales Tax and other local levies The Central Government grants SEZ status to any area only after concerned Sate Government commits to granting 100% exemption from the local and central sales tax. Thus, SEZ units are also exempted from the sales tax. Similarly, goods sold by DTA units to SEZ units are also exempted from sales tax. SEZ units are also exempted from the local levies like octroi, mandi tax, turnover tax etc.

Upgrade to CAclubindia Pro. Subscribe Now!

(Guest)

dear sir

i have a unit in ahmedabad. i am manufacturer of readymade garment which is registered with sez.

in 2005-2006 we had exporterd goods to mumbai airport agaisnt ARE1. IN ASSESMENT PROCEDURE VAT DEPARTMENT REQUIRED FORM H FOR THIS SALES.

WE HAVE ALL PROOF OF EXPORT SUBMITTED TO VAT DEPARTMENT. BUT THEY ARE NOT AGREED WITH PROOF OF EXPORT. THEY ARE ONLY ASKED FOR FORM H

OUR BUYER SAID WHEN THE SALES AGAINST ARE1 THERE IS NOT REQUIERED FORM H

SO WE ARE CONFUSED FOR THE IS IT EXPORT SALES OR FORM H SALE

EXCISE DEPARTMENT & INCOME TAX DEPARTMENT ARE ACEPTED FOR EXPORT SALES.

HOPE FOR IMMEDIATELY REPLY

(Guest)

Originally posted by :Guest
"	dear sir i have a unit in ahmedabad. i am manufacturer of readymade garment which is registered with sez. in 2005-2006 we had exporterd goods to mumbai airport agaisnt ARE1. IN ASSESMENT PROCEDURE VAT DEPARTMENT REQUIRED FORM H FOR THIS SALES. WE HAVE ALL PROOF OF EXPORT SUBMITTED TO VAT DEPARTMENT. BUT THEY ARE NOT AGREED WITH PROOF OF EXPORT. THEY ARE ONLY ASKED FOR FORM H OUR BUYER SAID WHEN THE SALES AGAINST ARE1 THERE IS NOT REQUIERED FORM H SO WE ARE CONFUSED FOR THE IS IT EXPORT SALES OR FORM H SALE EXCISE DEPARTMENT & INCOME TAX DEPARTMENT ARE ACEPTED FOR EXPORT SALES. HOPE FOR IMMEDIATELY REPLY	"