tsez fiscal
TRANSCRIPT
-
8/6/2019 Tsez Fiscal
1/87
Rajkumar S.Adukia 1
SPECIALSPECIAL
ECONOMIC ZONESECONOMIC ZONES--
FISCAL BENEFITSFISCAL BENEFITS
Rajkumar S. Adukia
09323061049/093221 39642
http://www.carajkumarradukia.com
-
8/6/2019 Tsez Fiscal
2/87
Rajkumar S.Adukia 2
Agenda
Special Fiscal Provisions relating to SEZ
Bond cum Legal Undertaking Income Tax
Service tax
FEMA
-
8/6/2019 Tsez Fiscal
3/87
Rajkumar S.Adukia 3
Fiscal Benefits available to SEZ
Cenvat
Customs
VAT
Income Tax
Service Tax
Central Sales tax
Securities
Transaction Tax
Exemptions of
tax ,duties or
cess in 21
Acts
Stamp Duty
-
8/6/2019 Tsez Fiscal
4/87
Rajkumar S.Adukia 4
Fiscal Provisions for SEZ
Chapter VI of Special Economic Zones Act ,2005 (Section 26 to
Section 30) relates to Special Fiscal Provisions for SEZ
Chapter IV of Special Economic Zones Rules, 2006 (Rule 22 to Rule46) relates to Terms and conditions subject to which entrepreneur
and developer shall be entitled to exemptions, drawbacks and
concessions
Chapter V of Special Economic Zones Rules, 2006 (Rule 47 to Rule
52) relates to conditions subject to which goods may removed from
Special Economic Zones to DTA
-
8/6/2019 Tsez Fiscal
5/87
Rajkumar S.Adukia 5
Exemption available to Sub
contractor also Rule 10 Exemptions, drawbacks and concessions on the goods
and services allowed to a Developer or Co-developer will
also be available to the contractors appointed by suchDeveloper or Co-developer
All the documents in such cases should bear the name of
the Developer or Co-developer along with the contractor
Documents should be filed jointly in the name of the
Developer or Co-developer and the contractor:
-
8/6/2019 Tsez Fiscal
6/87
Rajkumar S.Adukia 6
Exemption from
taxes,duties or cess- Sec 7
Sec 7 of The Special Economic Zones Act,2005 -
Any goods or services exported out of, or imported into,
or procured from the Domestic Tariff Area by, -
(i) a Unit in a Special Economic Zone; or
(ii) a Developer;
shall, subject to such terms, conditions and limitations, asmay be prescribed, be exempt from the payment of taxes,
duties or cess under all enactments specified in the First
Schedule.
-
8/6/2019 Tsez Fiscal
7/87
Rajkumar S.Adukia 7
First Schedule to The Special
Economic Zones Act, 20051. The Agricultural Produce Cess Act, 1940
2. The Coffee Act, 1942
3. The Mica Mines Labour Welfare Fund Act, 1946
4. The Rubber Act, 1947
5. The Tea Act, 1953 .
6. The Salt Cess Act, 1953 .
7. The Medicinal and Toilet Preparations (Excise Duties) Act,
1955 .
-
8/6/2019 Tsez Fiscal
8/87
Rajkumar S.Adukia 8
First Schedule to Special
Economic Zones Act, 20058. The Additional Duties of Excise (Goods of Special
Importance) Act, 1957
9. The Sugar (Regulation of Production) Act, 1961
10. The Textiles Committee Act, 1963
11. The Produce Cess Act, 1966
12. The Marine Products Export Development Authority Act, 1972
13. The Coal Mines (Conservation and Development Act, 1974 .
14. The Oil Industry (Development) Act, 1974 .
-
8/6/2019 Tsez Fiscal
9/87
Rajkumar S.Adukia 9
First Schedule to Special
Economic Zones Act, 2005
15. The Tobacco Cess Act, 1975
16. The Additional Duties of Excise (Textile and Textile Articles)Act, 1978
17. The Sugar Cess Act, 1982
18. The Jute Manufactures Cess Act, 1983
19. The Agricultural and Processed Food Products Export CessAct, 1985
20. The Spices Cess Act, 1986
21. The Research and Development Cess Act, 1986
-
8/6/2019 Tsez Fiscal
10/87
Rajkumar S.Adukia 10
1.The Agricultural Produce Cess Act,
1940
Act to make better financial provision for the IndianCouncil of Agricultural Research
It impose on certain articles a cess by way of customsduty at the rate of .5% on export, the proceeds of whichshall be paid to the Council.(Sec 3)
It imposes cess on 21 items which are as underBones,bristles,butter,cereals other than rice and
wheat,drugs,fibre for brushes, fish, fruits, ghee, hides,manures,oilcakes,pulses,seeds,skins,spices,tobacco,vegetables,wheat,wheat flour,wool,
-
8/6/2019 Tsez Fiscal
11/87
Rajkumar S.Adukia 11
2.The Coffee Act, 1942
A duty of excise is levied at rate not exceeding Rs 6 per100 weight as may be fixed by the Central Governmenton all coffee
A duty of customs is levied on all code produced in Indiaand exported from India at rate not exceeding Rs 6 per100weight as may be fixed by the Central Government(sec 11)
The proceeds of the duty of customs and of the duty ofexcise reduced by the cost of collection is paid to the theIndian Coffee Market Expansion Board (Sec 13)
-
8/6/2019 Tsez Fiscal
12/87
Rajkumar S.Adukia 12
3. The Mica Mines Labour Welfare
Fund Act, 1946
An Act to constitute a fund for the financing of activitiesto promote the welfare of labour employed in the micamining industry.
A duty of customs is levied on all mica exported at suchrate, not exceeding 6.25 % ad valorem, as may from timeto time be fixed by the Central Government (Sec 2)
Proceeds of the duty of customs recovered is paid to the
credit of Mica Mines Labour Welfare Fund (Sec 2) Fund utilise the money to promote the welfare of labour
employed in the mica mining industry
-
8/6/2019 Tsez Fiscal
13/87
Rajkumar S.Adukia 13
4. The Rubber Act, 1947
Act for the development of the rubber industry
A duty of excise is levied on all rubber produced in lndiaat such rate not exceeding Rs 2 per kg of rubber as theCentral Government may fix.(Section 12(1)
The proceeds of the duty of excise collected under thissection reduced by the cost of collection is first creditedto the Consolidated Fund of lndia
Amount collected Paid by the Central Government to theRubber Board for being utilised for the purpose of thisAct (Section 12(7)
-
8/6/2019 Tsez Fiscal
14/87
Rajkumar S.Adukia 14
5. The Tea Act, 1953 .
An Act to Provide for the control by the Union of the teaindustry, including the control, in pursuance of theInternational Agreement now in force, of the cultivation
of tea in, and of the export of tea from, India and for thatpurpose to establish a Tea Board and levy a customs dutyon tea exported from India.
Customs duty- on tea exported or taken outside India atsuch rate not exceeding Rs 2 per 100 pounds as the
Central Government may notify in the Official Gazette(Sec 25)
The proceeds of the cess levied under is first credited tothe Consolidated Fund of India and the CentralGovernment may pay to the Tea Board (Sec 26)
-
8/6/2019 Tsez Fiscal
15/87
Rajkumar S.Adukia 15
6. The Salt Cess Act, 1953 .
A cess in the nature of excise duty is levied on all saltmanufactured
(a) in the case of salt manufactured in a private salt factory,at the rate of two annas per standard maund
(b) in the case of salt manufactured in a salt factory solelyowned or solely worked by the Central Government atthe rate of three and a half annas per standard maund(Section 3)
It is used to meet the expenses incurred on the saltorganisation maintained by Government and on themeasures taken by Government in connection with themanufacture, supply and distribution of salt.
-
8/6/2019 Tsez Fiscal
16/87
Rajkumar S.Adukia 16
7. The Medicinal and Toilet
Preparations (Excise Duties)
Act, 1955
An Act for the levy and collection of duties of excise on
medicinal and toilet preparations containing alcohol,
opium, Indian hemp or other narcotic drug or narcotic.
Toilet preparation means any preparation which is
intended for use in the toilet of the human body or in
perfuming apparel of any description, or any substance
intended to cleanse, improve or alter the complexion,
skin, hair or teeth, and includes deodorants and perfumes(Section 2(k))
-
8/6/2019 Tsez Fiscal
17/87
Rajkumar S.Adukia 17
7. The Medicinal and Toilet
Preparations (Excise Duties) Act,
1955 Schedule contd..Description of dutiable goods Rate of duty
Medicinal and toilet
reparations, containingalcohol,
Rupees seventeen and ann as eight
per gallon of the strength of Londonproof Spirit.
Ayurvedic preparations
containing self generated
Alcohol, which are capable
of being consumed as
ordinary alcoholic beverages.
Rupees three per gallon
All other Medicinal and toilet
reparations not otherwise
specified containing alcohol
Rupees five per gallon of the
strength of London proof spirit.
-
8/6/2019 Tsez Fiscal
18/87
Rajkumar S.Adukia 18
8. The Additional Duties of Excise (Goods
of Special Importance) Act, 1957
A duty of excise at the rate or rates specified in the First
Schedule to this Act in respect of the following
goods,namely, sugar, tobacco, cotton fabrics, rayon or
artificial silk fabrics and woolen fabrics produced or
manufactured in India
The duties of excise shall be in addition to the duties of
excise chargeable on such goods under the Central
Excises and Salt Act, 1944 (Section 3)
-
8/6/2019 Tsez Fiscal
19/87
Rajkumar S.Adukia 19
9. The Sugar (Regulation
of Production) Act, 1961
Where the quantity of sugar produced in a factory duringany year exceeds the permissible quota fixed for it forthat year
there shall be levied and collected on the quantity ofsugar which is produced in excess of the permissiblequota
a special duty of excise at the rate at which the duty ofexcise is chargeable on sugar under the Central ExcisesAct
The special duty of excise shall be in addition to the dutyof excise chargeable on sugar under the Central ExcisesAc
-
8/6/2019 Tsez Fiscal
20/87
Rajkumar S.Adukia 20
10. The Textiles Committee
Act, 1963
An Act to provide for the establishment of a Committeefor ensuring the quality of textiles and textile machineryand for matters connected therewith.
The Committee may levy such fees as may be
prescribed--(a) For inspection and examination of textiles,(b) For inspection and examination of textile machinery,(c) for any other service which the Committee may renderto the manufacturers of textiles and textile machinery(Section 12)
-
8/6/2019 Tsez Fiscal
21/87
Rajkumar S.Adukia 21
11.The Produce Cess Act, 1966
An Act that provides for the imposition of cess on certainproduce for the improvement and development of themethods of cultivation and marketing of such produceand for matters connected therewith
A cess is levied for the purposes of this Act on everyproduce specified First Schedule, which is exported fromany customs port to any port beyond the limits of India, aduty of customs at such rate, not exceeding the ratespecified in the First Schedule
A cess is levied for the purposes of this Act, on everyproduce specified in the Second Schedule, a duty ofexcise at such rate, not exceeding the rate specified inSecond Schedule (Section 3)
-
8/6/2019 Tsez Fiscal
22/87
Rajkumar S.Adukia 22
12. The Marine Products Export
Development Authority Act, 1972
An Act to provide for the establishment of an Authorityfor the development of the marine products industry
A cess is levied on all marine products which areexported at rate not exceeding 3% as the CentralGovernment decide (Sec 14(1))
The cess levied shall be in addition to any access or dutyleviable on marine products under any other law for thetime being in force. (Sec 14(2))
The proceeds of the cess is first credited to theConsolidated Fund of India and the Central Government
pay to the Marine Products Export DevelopmentAuthority from out of such proceeds, after deducting the
expenses (Sec 15)
-
8/6/2019 Tsez Fiscal
23/87
Rajkumar S.Adukia 23
13. The Coal Mines
(Conservation and
Development Act, 1974
An Act to provide for the conservation of coal anddevelopment of coal mines and for matters connectedtherewith or incidental thereto.
Excise Duty - on all coal raised and despatched, and onall coke manufactured and despatched, from the collieriesin India at the rate not exceeding Rs 10 per tonne (sec 6)
Custom duty - on all coal (including soft and hard coke),imported or brought into India from any place outsideIndia, a duty of customs at the rates equivalent to the ratesof duty of excise (sec 7)
Amount collected shall be disbursed by the CentralGovernment to the owners, agents or managers of coal
mines (Sec 9)
-
8/6/2019 Tsez Fiscal
24/87
Rajkumar S.Adukia 24
14. The Oil Industry
(Development) Act, 1974 .
An Act to provide for the establishment of a Board for thedevelopment of oil industry and for that purpose to levy aduty of excise on crude oil and natural gas and for matters
connected therewith. Excise duty- on every item specified in column 2 of the
Schedule at such rate not exceeding the rate set forth inthe corresponding entry in column 3 of the Schedule (Sec15)
The proceeds of the duties of excise levied under shallfirst be credited to the Consolidated Fund of India and theCentral Government pay to the Oil Industry DevelopmentFund (sec 16)
-
8/6/2019 Tsez Fiscal
25/87
Rajkumar S.Adukia 25
15. The Tobacco
Cess Act, 1975
An Act to provide for the Levy and collection, by way ofcess, of a duty of excise on virginia tobacco and a duty ofcustoms on tobacco, for the development of tobaccoindustry
Excise duty-at the rate of 1 paisa per kg on virginia tobaccowhich is produced in India and sold at a registered auction
platform. (Sec 3)
customs duty -at rate not exceeding 1% ad valorem, as the
Central Government may specify on all tobacco which isexported.(Sec 4)
The proceeds shall first be credited to the ConsolidatedFund of India and the Central Government may pay to theBoard, for utilised for the purposes of the Tobacco Board
Act, 1975 (Sec 5)
-
8/6/2019 Tsez Fiscal
26/87
Rajkumar S.Adukia 26
16. The Additional Duties
of Excise (Textile and Textile
Articles) Act, 1978
An Act to provide for the levy and collection ofadditional duties of excise on certain textiles and textilearticles
Excise duty-Goods of the description mentioned in theSchedule are chargeable to duty equal to 10% of thetotal amount chargeable on such goods. (Sec 3)
Items in schedule are Man-made fibres , Cotton yarn ,Woolen and acrylic spun yarn, Non-cellulosic spunyarn,Cotton fabrics, Silk fabrics, Woolen fabrics, Man-made fabrics, Wool tops.
-
8/6/2019 Tsez Fiscal
27/87
Rajkumar S.Adukia 27
17. The Sugar Cess Act, 1982
An Act to provide for the imposition of a cess on sugarfor the development of sugar industry and for mattersconnected therewith
A cess is levied for the purposes of the SugarDevelopment Fund Act, 1982, a duty of excise on allsugar produced any sugar factory in India, at such rate notexceeding Rs 15 per quintal of sugar (Sec 3)
The proceeds of the duty of excise levied under section 3shall be credited to the Consolidated Fund of India
(Sec 4)
-
8/6/2019 Tsez Fiscal
28/87
Rajkumar S.Adukia 28
18. The Jute Manufactures
Cess Act, 1983
An Act to provide for the levy and collection, by way ofcess, of a duty of excise on jute manufactures for the
purpose of carrying out measures for the development ofproduction of jute manufactures
Cess is levied on every article of jute manufacturespecified in column 2 of the Schedule and produced inIndia by a duty of excise at such rate not exceeding the ratespecified in the corresponding entry in column 3 thereof(Sec 3)
The proceeds of the duty of excise levied shall first becredited to the Consolidated Fund of India and the CentralGovernment may pay to the Jute ManufacturesDevelopment Council for the purposes of the JuteManufactures Development Council Act, 1983 (Sec 4)
-
8/6/2019 Tsez Fiscal
29/87
Rajkumar S.Adukia 29
19. The Agricultural and
Processed Food Products
Export Cess Act, 1985
An Act to provide for the levy and collection, by way of acess, of a duty of customs on the export of certainagricultural and processed food products for the
development and promotion of their export Custom duty- at a rate not exceeding 3% by way of a cess
on all Scheduled products, which are exported.(Sec 3)
The proceeds of the duties of customs levied shall first becredited to the consolidated Fund of India and the CentralGovernment may pay to the Agricultural and ProcessedFood Products Export Development Authority (Sec 4)
-
8/6/2019 Tsez Fiscal
30/87
Rajkumar S.Adukia 30
20. The Spices
Cess Act, 1986 An Act to provide for imposition of cess on all spices
which are exported for the purposes of carrying outmeasures for the development of export of spices.
customs duy-on spices at such rate not exceeding 5% , advalorem (Sec 3)
proceeds of the duty of customs levied credited to theconsolidated Fund of India and the Central Governmentmay pay for the purposes of the Spices Board Act, 1986(Sec 3)
-
8/6/2019 Tsez Fiscal
31/87
Rajkumar S.Adukia 31
21. The Research and
Development
Cess Act, 1986 An Act to provide for the levy and collection of a cess on
all payments made for the import of technology for thepurposes of encouraging the commercial application ofindigenously developed technology and for adaptingimported technology to wider domestic application
a cess is levied at such rate not exceeding five per cent,on all payments made towards the import of technology(Sec 3)
The proceeds of the cess levied and collected shall first becredited to the Consolidated Fund of India and the CentralGovernment may pay to the Technology DevelopmentBoard constituted under the Technology DevelopmentBoard Act, 1995 for the purposes of the Board
(Sec 4)
-
8/6/2019 Tsez Fiscal
32/87
Rajkumar S.Adukia 32
Terms and conditions for availing
exemptions, drawbacks and concessions
(Rule 22(1) )(i)The Unit shall execute a Bond-cum-Legal Undertaking in Form H,
with regard to its obligations regarding proper utilization and
accountal of goods and regarding achievement of positive net
foreign exchange earning;
(ii) The Developer and Co-Developer shall execute the Bond-cum-
Legal Undertaking in Form D with regard to their obligations
regarding proper utilization and accountal of goods
(iii) The Bond-cum-Legal Undertaking shall be jointly accepted by
Development Commissioner and by the Specified Officer:
-
8/6/2019 Tsez Fiscal
33/87
Rajkumar S.Adukia 33
Activities covered in Bond-cum-Legal
Undertaking (Rule 22(1)(iii) )(a) the movement of goods between port of import or export and the
Special Economic Zone;
(b) the authorized operations, as applicable to Unit or Developer;
(c) temporary removal of goods or goods manufactured in Unit for
the purposes of repairs or testing or calibration or display or
processing or sub-contracting of production process or production
or other temporary removals into Domestic Tariff Area without
payment of duty
(d) re-import of exported goods.
-
8/6/2019 Tsez Fiscal
34/87
Rajkumar S.Adukia 34
Responsibility for Execution of Bond cum-Legal
Undertaking (Rule 22(1)(iv))
Status of
entrepreneur or
Developer
Responsibility
company Managing Director of thecompany or any other
authorized person
partnership firm all the partners or authorized
partner(s);
Hindu Undivided Family Karta
proprietorship concern proprietor
-
8/6/2019 Tsez Fiscal
35/87
Rajkumar S.Adukia 35
Value of Bond-cum-Legal Undertaking
Rule 22(1)(iv)) Equal to the amount of effective duties leviable on import or
procurement from the Domestic Tariff Area of the projected
requirement of capital goods, raw materials, spares,
consumables, intermediates, components, parts, packingmaterials for three months
The Bond-cum-Legal Undertaking
amount shall be monitored quarterly
or yearly on the basis of QuarterlyProgress Report or Annual Progress Report
-
8/6/2019 Tsez Fiscal
36/87
Rajkumar S.Adukia 36
An Exception- Rule 27(3)
Any goods for the personal use of or consumption by
officials,workmen, staff, owners or any other person in relation to a
Unit or Developer, shall not be eligible for exemptions, drawbacks
and concessions or any other benefit
-
8/6/2019 Tsez Fiscal
37/87
Rajkumar S.Adukia 37
Income TaxIncome Tax
BenefitsBenefits
-
8/6/2019 Tsez Fiscal
38/87
Rajkumar S.Adukia 38
Relevant Sections in
Income Tax Act,1961S.No Section Description
1 10(15)(viii) Interest received on deposit with Offshore
Banking Unit is exempt
2 10AA Exemption to newly established Units in SEZ
3 54GA Exemption of Capital gain on transfer of
asset in case of shifting of Industrial
Undertaking from Urban Area to SEZ
4 80-IAB Deduction is respect of profits and gains in
development of SEZ
5 80LA Deduction from income of OBU and IFSC
6 115JB(6) Non applicability of MAT to SEZ
-
8/6/2019 Tsez Fiscal
39/87
Rajkumar S.Adukia 39
Relevant Sections in Income
Tax Act,1961
S.No Section Description
7 115-O Exemption from dividend distributiontax in respect of income of SEZ
8 197A No TDS on interest on deposits made
with OBU by Non-resident or person
not ordinary resident in India
Changes in the Income Tax Act 1961 relating to SEZ made
by
Special Economic Zones Act 2005 w.e.f 10/02/2006
-
8/6/2019 Tsez Fiscal
40/87
Rajkumar S.Adukia 40
Exemption to newly established
Units in SEZ
- Section 10AA
-
8/6/2019 Tsez Fiscal
41/87
Rajkumar S.Adukia 41
Exemption to Unit who begins to manufacture or produce articles
or things or provide any services during the PY relevant to any AYcommencing on or after 01.04.2006
Deduction Total 15 Years
100% of Profits from export
for 5 consecutive years 50% of Profits from exports
for further 5 assessment years
50% of Profits for as credited to Special Economic Zone Re-
investment Reserve Account for next 5years Absence of restrictive proviso in new Sec. 10AA dealing with
Reconstruction, reconstitution of business in existence
-
8/6/2019 Tsez Fiscal
42/87
Rajkumar S.Adukia 42
Use of Special Economic Zone Re-
investment Reserve Account( S 10AA(2(a))
Acquiring machinery or plant
Until the acquisition of the machinery or plant for the purposes of
the business of the undertaking other than
for distribution by way of dividends or profits or
for remittance outside India as profits or
for the creation of any asset outside India;
-
8/6/2019 Tsez Fiscal
43/87
Rajkumar S.Adukia 43
Mis-use of Special Reserve Account
( S 10AA(3))
If the Special Reserve Account is misutilised, then the deduction
would be taken back in the year in which the Special Reserve
Account is misutilised.
If the Special Reserve Account is not utilised for acquiring new plant
and machinery within three years as stated above then the deduction
would be taken back in the year immediately following the period of
three years.
-
8/6/2019 Tsez Fiscal
44/87
Rajkumar S.Adukia 44
Consequences for merger and
demerger ( S 10AA(5)) Where an undertaking is transferred to another company under a
scheme of amalgamation or demerger, the deduction under
section 10AA shall be allowable in the hands of the amalgamated
or the resulting company.
However, no deduction shall be admissible under this section to
the amalgamating company or the demerged company for the
previous year in which amalgamation or demerger takes place.
-
8/6/2019 Tsez Fiscal
45/87
Rajkumar S.Adukia 45
Exemption of
Capital Gain
on Shifting to SEZ
-Sec 54GA
-
8/6/2019 Tsez Fiscal
46/87
Rajkumar S.Adukia 46
Exemption of capital gains on transfer of assets in cases of
shifting of industrial undertaking from urban area to any
Special Economic Zone.
The exemption is available to all categories of assesses on
capital gain arising on the transfer of certain capital asset of
industrial undertaking from urban area to SEZ. (whether
developed in an urban area or not)
The Asset transferred should be machinery or plant or building
or land or any rights in building or land
The capital gain should be utilized within one year before or
three years after the date of transfer for the specified purpose.
-
8/6/2019 Tsez Fiscal
47/87
Rajkumar S.Adukia 47
Specified Purpose- 54GA
contd..(i) purchased machinery or plant
(ii) acquired building or land or constructed building
(iii) shifted the original asset and transferred the establishment of
such undertaking to the Special Economic Zone; and
(iv) incurred expenses on such other purposes as may be specified
in a scheme framed by the Central Government for the
purposes of this section.
The amount of capital gain which is not so utilised for the
specific purposes should be deposited in an account with any
specified bank or institution and utilised in accordance with
the scheme notified by the Central Government
-
8/6/2019 Tsez Fiscal
48/87
Rajkumar S.Adukia 48
Quantum Of Deduction
-Sec 54GA contd..Situation Result
Amount of Capital Gain < = Costand expensesincurred for specified Purposes
Entire Capital Gain exempt
Amount of Capital Gain > Cost and
expenses incurred for
specified Purposes.
Exemption: to the extent of cost
and expenses incurred
-
8/6/2019 Tsez Fiscal
49/87
Rajkumar S.Adukia 49
Definition of Urban area
Urban area means any such area within the limits of a
municipal corporation or municipality as the Central
Government may, having regard to the population,
concentration of industries, need for proper planning of
the area and other relevant factors, by general or special
order, declare to be an urban area for the purposes of this
sub-section.
-
8/6/2019 Tsez Fiscal
50/87
Rajkumar S.Adukia 50
Deduction in respect
of profits
by SEZ Developer
-Sec 80 IAB
-
8/6/2019 Tsez Fiscal
51/87
Rajkumar S.Adukia 51
Deductions in respect of profits and gains from industrial
undertakings or enterprises engaged in development of
Special Economic Zone.
An undertaking which develops a special Economic Zone
notified on or after 1.4.2005 will not be eligible to claim
deduction under section 80-IA.but will now be claimingdeduction under new section 80 IAB.
Available to an assessee , being a Developer whose gross
total income, includes any profit and gains derived by an
undertaking or an enterprise from any business of
developing a special Economic Zone , notified on or after
1.4.2005 under Special Economic Zones Act,2005
-
8/6/2019 Tsez Fiscal
52/87
Rajkumar S.Adukia 52
QUANTUM OF DEDUCTION
- Sec 80 IAB contd..
A deduction of an amount equal to 100% of the profits and gains
derived from such business for 10 consecutive assessment years.
The assessee has the option of claiming the said deduction for any 10
consecutive assessment years out of 15 years beginning from the
year in which a SEZ has been notified by the Central Government
-
8/6/2019 Tsez Fiscal
53/87
Rajkumar S.Adukia 53
Transfer of Undertaking
If a taxpayer who develops a special economic zone on or after April
1, 2005 (transferor ) transfers the operation/maintenance of such
zone to another developer (transferee), then deduction shall be
allowed to the transferee for the remaining period of 10 years as if the
operation and maintenance were not so transferred.
Similar rule will be applicable in the case of amalgamation of an
Indian company which has developed a special economic zone with
another Indian company.
-
8/6/2019 Tsez Fiscal
54/87
Rajkumar S.Adukia 54
No Tax
on Distributed Profits
-Sec 115O(6)
-
8/6/2019 Tsez Fiscal
55/87
Rajkumar S.Adukia 55
No tax on dividends would be chargeable in respect of the totalincome of an undertaking or enterprise engaged in
(a) developing a SEZ or
(b) developing and operating a SEZ or
( c) developing, operating and maintaining a SEZ IF such dividend (whether interim or otherwise) is declared,
distributed or paid by such Developer or enterprise, on or after
the 1st day of April, 2005 out of its current income
No tax either in the hands of the Developer or enterprise or
person receiving such dividend
-
8/6/2019 Tsez Fiscal
56/87
Rajkumar S.Adukia 56
OTHER RELATED
INCOME TAX
PROVISIONS
-
8/6/2019 Tsez Fiscal
57/87
Rajkumar S.Adukia 57
Industrial park scheme
The Central Government framed the scheme for industrial parks,-Industrial
Park Scheme, 2002 in exercise of the powers conferred by clause (iii) of sub-
section (4) of section 80 IA of the Income-tax Act, 1961
scheme was applicable for any undertaking which develops, develops and
operates or maintains and operates an Industrial Park for the period
beginning on the 1st day of April, 1997 and ending on the 31st day of March,
2006
this has been extended up to 31.03.2009 by the Finance Act,2006
Eligibility- deduction of 100 % profits derived from such business for ten
consecutive years. Assessee can claim deduction for any ten consecutive years out of fifteen
years beginning from the year in which the undertaking
develops/operates/maintains the Industrial park.
-
8/6/2019 Tsez Fiscal
58/87
Rajkumar S.Adukia 58
Investors in SEZ
Exemption is provided to investors in special economic
Zones under Sec 10 (23G) of the Income Tax Act, 1961.
-
8/6/2019 Tsez Fiscal
59/87
Rajkumar S.Adukia 59
Undertaking developing and
building housing projects Sec 80- IB (10) - Deduction in respect of profits and gains from certain
industrial undertakings other than infrastructure development
undertakings
Deduction: For projects approved before the 31st day of March, 2007 by a localauthority shall be hundred per cent of the profits derived in the previous year
relevant to any assessment year from such housing project
Conditions:
(a) Such undertaking has commenced or commences development and construction
of the housing project on or after the 1st day of October, 1998 and completessuch construction,
(i) In a case where a housing project has been approved by the local authority
before the 1st day of April, 2004, on or before the 31st day of March, 2008;
-
8/6/2019 Tsez Fiscal
60/87
Rajkumar S.Adukia 60
(ii) in a case where a housing project has been, or, is approved by the local
authority on or after the 1st day of April, 2004, within four years from the
end of the financial year in which the housing project is approved by the
local authority.
(b) The project is on the size of a plot of land which has a minimum area of one
acre:
(c) the residential unit has a maximum built-up area of one thousand square feetwhere such residential unit is situated within the city of Delhi or Mumbai or
within twenty-five kilometres from the municipal limits of these cities and
one thousand and five hundred square feet at any other place; and
(d) The built-up area of the shops and other commercial establishments included
in the housing project does not exceed five per cent of the aggregate built-uparea of the housing project or two thousand square feet, whichever is less.]
-
8/6/2019 Tsez Fiscal
61/87
Rajkumar S.Adukia 61
Special provisions in
respect of certain
undertakings or
enterprises in certainspecial category
-
8/6/2019 Tsez Fiscal
62/87
Rajkumar S.Adukia 62
Special category states
Arunachal Pradesh
Assam
Manipur
Meghalaya
Mizoram
Nagaland
Sikkim
Tripura
-
8/6/2019 Tsez Fiscal
63/87
-
8/6/2019 Tsez Fiscal
64/87
Rajkumar S.Adukia 64
Undertaking must manufacture in any Export Processing
Zone or Integrated Infrastructure Development Centre or
Industrial Growth Centre or Industrial Estate or IndustrialPark or Software Technology Park or Industrial Area or
Theme Park
-
8/6/2019 Tsez Fiscal
65/87
Rajkumar S.Adukia 65
Benefits to OBUBenefits to OBU
-
8/6/2019 Tsez Fiscal
66/87
Rajkumar S.Adukia 66
Interest Income from OBU is exempt
In computing the total income of previous year of any person any
income by way of interest received by
1. Non resident or
2. a person who is not ordinarily resident in India
on a deposit made on or after the 1st day of April, 2005, in an
Offshore Banking Unit
shall not be included (Section 10(15)(viii))
-
8/6/2019 Tsez Fiscal
67/87
Rajkumar S.Adukia 67
Deductions in respect of certain
incomes of Offshore Banking Unitsand International Financial
Services Centre 80LA
Assesses covered
(i) Scheduled bank, or, any bank incorporated by or
under the laws of a country outside India; and having
an Offshore Banking Unit in a Special Economic
Zone;
or
(ii) Unit of an International Financial Services Centre,
-
8/6/2019 Tsez Fiscal
68/87
Rajkumar S.Adukia 68
Amount of deduction-Sec 80LA(1)
(a) 100% of such income for 5 consecutive assessment yearsbeginning with the assessment year relevant to theprevious year in which
the permission,under 23(1)(a) of the Banking RegulationAct, 1949 or
permission or registration under the Securities and
Exchange Board of India Act, 1992 (15 of 1992) or
any other relevant law was obtained, and thereafter;(b) 50% of such income for next 5 consecutive assessment
years.
-
8/6/2019 Tsez Fiscal
69/87
Rajkumar S.Adukia 69
Income Exempted-Sec 80LA(2)Income refers to income :
(a) from an Offshore Banking Unit in a Special Economic Zone;
or
(b) from the business referred to in Section 6(1) the Banking
Regulation Act, 1949 with an undertaking located in a SpecialEconomic Zone or any other undertaking which develops,
develops and operates or develops, operates and maintains a
Special Economic Zone; or
(c) from any Unit of the International Financial Services Centre
from its business for which it has been approved for setting up
in such a Centre in a Special Economic Zone.
-
8/6/2019 Tsez Fiscal
70/87
Rajkumar S.Adukia 70
80LA.
A report from a Chartered Accountant in Form No. 10CCF certifying
that the deduction has been correctly claimed in accordance with the
provisions of this section should be submitted along with the return
of income.
A copy of permission obtained under section 23(1)(a) of Banking
Regulation Act should be submitted along with the return of income.
-
8/6/2019 Tsez Fiscal
71/87
Rajkumar S.Adukia 71
Case Laws
Courts and Tribunals have held that the requirement to file the report
along with the return of Income is directory and not mandatory
Citation: 251 ITR 693- Commissioner of Income-tax vs. Hemsons
Industries (Andhra Pradesh High Court)
The mere fact that the assessee failed to enclose the audit report along
with the return itself would not disentitle him to claim the benefit,
and, on the other hand, if he files the audit report before the
assessment order is passed, he will be entitled to the deduction
-
8/6/2019 Tsez Fiscal
72/87
Rajkumar S.Adukia 72
No deduction of Tax 197A(1C)
No deduction of tax shall be made by the Offshore Banking Unit from
the interest paid
(a) on deposit made on or after the 1st day of April, 2005, by a non-
resident or a person not ordinarily resident in India; or
(b) on borrowing, on or after the 1st day of April, 2005, from a non-
resident or a person not ordinarily resident in India.
-
8/6/2019 Tsez Fiscal
73/87
Rajkumar S.Adukia 73
Other BenefitsOther Benefits
-
8/6/2019 Tsez Fiscal
74/87
Rajkumar S.Adukia 74
Exemption from service tax
The exemption from payment of service tax on taxable services
rendered to a Developer or a Unit
(including a Unit under construction)
by any service provider
shall be available for the authorized operations in a Special Economic
Zone. Section 26(1)(e) and rule 31
-
8/6/2019 Tsez Fiscal
75/87
Rajkumar S.Adukia 75
Exemption from Central Sales
tax Every Developer and the entrepreneur is entitled exemption from the
levy of taxes on the sale or purchase of goods other than newspapers
under the Central Sales Tax Act, 1956 if such goods are meant to
carry on the authorized operations by the Developer or entrepreneur. Sec 26(1)(g)
This is subject to the condition that the dealer selling goods in the
course of inter state trade or commerce to a registered dealer under
the Central Sale Tax Act, 1956 shall furnish a declaration in Form
I prescribed under the Central Sales Tax (Registration and Turnover)
Rules, 1957.- Proviso to Rule 32
-
8/6/2019 Tsez Fiscal
76/87
Rajkumar S.Adukia 76
Changes made in Central
Sales tax,1956 No CST shall be payable by any dealer in respect of sale of any
goods made by such dealer,
in the course of inter-State trade or commerce,
to a registered dealer( developer of SEZ or SEZ Unit as the case may
be)
for the purpose of manufacture, production, processing, assembling,
repairing, reconditioning, re-engineering, packaging or for use as
trading or packing material or packing accessories in an unit located
in any special economic zone,
if such registered dealer has been authorised to establish such unit bythe authority specified by the Central Government in this behalf.
(Development Commissioner is of SEZ is authorized to permit a
person to set up unit in SEZ)
(Section 8(6) of Central Sales Tax Act, 1956)
-
8/6/2019 Tsez Fiscal
77/87
Rajkumar S.Adukia 77
Securities Transaction Tax
Every Developer and the entrepreneur shall be entitled to exemption
from the securities transaction tax leviable under section 98 of the
Finance (No. 2) Act, 2004 in case the taxable securities transactions
are entered into by a non-resident through the International FinancialServices Centre. Sec 26(1)(f)
-
8/6/2019 Tsez Fiscal
78/87
Rajkumar S.Adukia 78
Exemption from Stamp Duty
under Indian Stamp Act,1899 Exemption from stamp duty on any instrument executed, by, or, on
behalf of, or, in favour of the Developer, or Unit or in connection
with the carrying out of purposes of the Special Economic Zone.(
Section 3 Third Proviso of Indian Stamp Act,1899)
Effected by Change in Indian Stamp Act,1899 by Special Economic
Zones Act ,2005 Third Schedule ,Part III
-
8/6/2019 Tsez Fiscal
79/87
Rajkumar S.Adukia 79
FEMA ProvisionsFEMA Provisions
relating to SEZrelating to SEZ
-
8/6/2019 Tsez Fiscal
80/87
Rajkumar S.Adukia 80
Foreign Direct investment
FDI is allowed through automatic route for all manufacturingactivities in SEZ except
1) Arms and ammunition , Explosives and allied items of defenceequipments, Defence aircrafts and warships,
2) Atomic substances, Narcotics and Psychotropic Substances andhazardous Chemicals,
3) Distillation and brewing of Alcoholic drinks and
4) Cigarette/cigars and manufactured tobacco substitutes.
Item 20 of Annexure B of Schedule I of Foreign ExchangeManagement( Transfer or Issue of Security by a person Residentoutside India) Regulations, 2000,
-
8/6/2019 Tsez Fiscal
81/87
Rajkumar S.Adukia 81
Foreign Direct investment
contd.. 100% FDI in trading activity will not be permitted
SEZ Unit can manufacture articles reserved for SSI even if foreign
equity exceeds 24%.No License is required (Department of IndustrialLicense Press Note No 5 dated 29-03-2000 Notification 7(11)/2000-
IP dated 04-12-2000)
-
8/6/2019 Tsez Fiscal
82/87
Rajkumar S.Adukia 82
Other Provisions for SEZ
No Time Limit for export of export proceeds which is normally 6
months for others (Foreign Exchange Management (Export of Goods
and Services) Regulation 2000)
Branch office may be set up in SEZ to undertake manufacturing and
service activities without permission of RBI in those sectors where
100% FDI is permitted (Foreign Exchange Management
(Establishment in India of Branch or other place of businesses)
Regulation 2000)
-
8/6/2019 Tsez Fiscal
83/87
Rajkumar S.Adukia 83
Other Provisions for SEZ
DTA units can pay for goods in Foreign Exchange for which goods
are supplied by SEZ to DTA RBI Circular 8/2005-06 dated
01/07/2005
A Unit Located in SEZ can open ,hold and maintain Foreign currency
account with authorized dealer in India (Foreign Exchange
Management (Foreign currency accounts by a person resident in
India),Regulations, 2000
-
8/6/2019 Tsez Fiscal
84/87
Rajkumar S.Adukia 84
Other Provisions for SEZ
A Unit in SEZ can enter into contract in commodity exchange or
market outside India to hedge the price risk in the commodity on
export/import without prior approval of RBI ( Foreign Exchange
Derivative Contracts) Regulation ,2000
SEZ can raise ECB for its own requirements and borrowed funds
shall not be transferred to its sister concern or any other Unit in DTA
(RBI Circular 2/2005-06 dated 01/07/2005)
-
8/6/2019 Tsez Fiscal
85/87
Rajkumar S.Adukia 85
Direct Dispatch of documents
to Foreign buyer SEZ Units can dispatch export documents direct to consignee outside
India.
These need not be routed through authorized dealer
Remittance should be obtained and GR/SDF form should be
submitted to authorized dealer with in 21 days for monitoring RBI
Circular 8/2005-06 dated 01/07/2005
-
8/6/2019 Tsez Fiscal
86/87
Rajkumar S.Adukia 86
Job Work abroad and direct
dispatch SEZ Units can undertake Job work abroad and export goods from
that country itself
Exporter has to make satisfactory arrangement for realisation of full
exports proceeds(RBI Circular 8/2005-06 dated 01/07/2005)
-
8/6/2019 Tsez Fiscal
87/87
QUESTIONS/
SUGGESTIONS/
COMMENTS ???