SEZ - Special Economic Zones in Tamil Nadu/Tax exemptions and other incentives and facilities offered to SEZ Units in Tamil Nadu

SPECIAL ECONOMIC ZONES IN TAMIL NADU

          A Special Economic Zone (SEZ) is a geographical region that is designed to export goods and provide employment. Special Economic Zones may be exempt from laws regarding taxes, quotas, Foreign Direct Investment (FDI)-bans, labour laws and other restrictive laws in order to make the goods manufactured in the Special Economic Zones at a globally competitive price.

          The category SEZ includes free trade zones (FTZ), export processing zones (EPZ), free zones (FZ) or free economic zones (FEZ), industrial parks or industrial estates (IE), free ports, and urban enterprise zones.

THE SPECIAL ECONOMIC ZONES ACT, 2005

          The Special Economic Zones Act, 2005 was passed by parliament in May, 2005 which received Presidential assent on 23^rd of June, 2005.  The draft SEZ Rules were wide discussed and put on the website of the Department of Commerce offering suggestions / comments.   Around 800 suggestions were received on the draft rules.  After extensive consultations, the SEZ Act, 2005 supported by SEZ Rules, came into effect on 10^th February, 2006, providing for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments.

          The main objectives of the SPECIAL ECONOMIC ZONE Act are:

(a) generation of additional economic activity
(b) promotion of exports of goods and services;
(c) promotion of investment from domestic and foreign sources;
(d) creation of employment opportunities;
(e) development of infrastructure facilities;

          The SPECIAL ECONOMIC ZONE Rules provide for:

1. Simplified procedures for development, operation, and maintenance of the Special Economic Zones and for setting up units and conducting business in Special Economic Zones;
2. Single window clearance for setting up of an Special Economic Zone;
3. Single window clearance for setting up a unit in a Special Economic Zone;
4. Single Window clearance on matters relating to Central as well as State Governments;
5. Simplified compliance procedures and documentation with an emphasis on self certification

Incentives and facilities offered to the

SPECIAL ECONOMIC ZONES

          The incentives and facilities offered to the units in Special Economic Zones for attracting investments into the Special Economic Zones, including foreign investment include:-

          1) Duty free import/domestic procurement of goods for development, operation and maintenance of Special Economic Zone Units

          2) 100% Income Tax exemption on export income for Special Economic Zone units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.

          3) Exemption from minimum alternate tax under section 115JB of the Income Tax Act.

          4) External commercial borrowing by Special Economic Zone units upto US $ 500 million in a year without any maturity restriction through recognized banking channels.

          5) Exemption from Central Sales Tax.

          6) Exemption from Service Tax.

          7) Single window clearance for Central and State level approvals.

          8) Exemption from State sales tax and other levies as extended by the respective State Governments.  

THE MAJOR INCENTIVES AND FACILITIES

AVAILABLE TO

SPECIAL ECONOMIC ZONE DEVELOPERS-

          1) Exemption from customs/excise duties for development of Special Economic Zones for authorized operations approved by the BOA.

          2) Income Tax exemption on income derived from the business of development of the Special Economic Zone in a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act.

          3) Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act.

          4) Exemption from dividend distribution tax under Section 115O of the Income Tax Act.

          5) Exemption from Central Sales Tax (CST).

          6) Exemption from Service Tax (Section 7, 26 and Second Schedule of the Special Economic Zone Act.

INCENTIVES TO SPECIAL ECONOMIC ZONE UNITS

Tax exemptions and other Incentives to

Special Economic Zones (SEZ) In India

• No licence required for import.
• Exemption from customs duty on import of capital goods, raw materials, consumables, spares etc.
• Exemption from Central Excise duty on procurement of capital goods, raw materials, consumable spares etc. from the domestic market.
• Supplies from DTA to SEZ units treated as deemed exports.
• Reimbursement of Central Sales Tax paid on domestic purchases.
• 100% income tax exemption for a block of five years, 50% tax exemptions for five years and upto 50% of the Profits ploughed back for next 5 years under section 10-A of Income tax Act.
• Supplies from DTA to SEZ to be treated as exports under 80HHC of the IT Act.
• 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.
• 100% Foreign Direct Investment in manufacturing, sector allowed through automatic route.
• Profits allowed to be repatriated freely without any dividend balancing requirement.
• In house customs Clearance on fast Track Customs clearance based on "self - certification".
• SEZ units may be for manufacturing, trading or service activity.
• 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.
• Facility to retain 100% foreign exchange receipts in EEFC Account.
• Facility to realize and repatriate export proceeds within 12 months.
• 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.
• Commodity hedging by SEZ units permitted.
• Capitilization of import payables.
• No cap on foreign investment.
• Domestic Sales on full duty subject to import policy in force.
• No fixed wastage norms.
• Full freedom for subcontracting including subcontracting abroad.
• Subcontracting facility available to jewellery units.
• Duty free goods to be utilized in 5 years.
• Job work on behalf of domestic exporters for direct export allowed.
• No routine examination by Customs of export and import cargo.
• No separate documentation required for customs and Exim Policy.
• Support services like banking, post office clearing agents etc. provided in Zone Complex.
• Developed plots and ready to use built up space available in SEZ.
• Exemption from Custom/Excise Duty on goods for setting up industries   in the zone.

State-Government Incentives to SEZ Units

• Zero rating of Input VAT for purchases from Domestic Tariff Area (DTA).
• Exemption from Stamp duty.
• Exemption from Electricity Duty.
• Public Utility status.
• Capital subsidies and Other incentives depending on size of Investment    and Employment under Tamil Nadu Industrial Policy 2007

List of Exporting Special Economic Zones (as on 31.3.2015)

S. No.	SEZ Name	Location	DC Name	Type	State	Notification Date
1	MEPZ Special Economic Zone	Chennai	MEPZ Special Economic Zone	Multiproduct	Tamil Nadu	1.1.2003
2	L & T Shipbuilding	kattupalli	MEPZ Special Economic Zone	Engg	Tamil Nadu	04.12.2009
3	Mahindra	Chengleput	MEPZ Special Economic Zone	IT / Hardware / Bio - inform	Tamil Nadu	26.10.2004
4	Nokia	Sriperumbudur	MEPZ Special Economic Zone	Telecomm Equipments	Tamil Nadu	17.08.2005
5	Flextronics Technologies (India) Private Limited	Sriperumbudur	MEPZ Special Economic Zone	Elec.Hardw are	Tamil Nadu	25.04.2006
6	Cheyyar SEZ	Cheyyar	MEPZ Special Economic Zone	Footwear	Tamil Nadu	13.04.2007
7	Synefra Construction Ltd. (Suzlon Infrastructure Ltd.)	Coimbatore	MEPZ Special Economic Zone	Engg	Tamil Nadu	10.08.2007
8	AMRL	Nanguneri	MEPZ Special Economic Zone	Multi prod	Tamil Nadu	18.11.2008
9	Pearl City CCCL	Tuticorin	MEPZ Special Economic Zone	Food Pro	Tamil Nadu	23.04.2009
10	Sipcot	Oragadam	MEPZ Special Economic Zone	Elec.Hardw are	Tamil Nadu	18.10.2007
11	Sicpot Hi-Tech	Sriperumbudur	MEPZ Special Economic Zone	Elect.Hardw are	Tamil Nadu	22.12.2006
12	Sipcot	Ranipet	MEPZ Special Economic Zone	Engg	Tamil Nadu	27.11.2007
13	Sipcot	Gangaikondan	MEPZ Special Economic Zone	Transport	Tamil Nadu	15.05.2008
14	Sipcot	perundurai	MEPZ Special Economic Zone	Engg	Tamil Nadu	23.04.2008
15	New Chennai	Cheyyur	MEPZ Special Economic Zone	Engg	Tamil Nadu	28.09.2007
16	New Chennai	Cheyyur	MEPZ Special Economic Zone	Multi Services	Tamil Nadu	23.11.2007
17	J. Matadee	Mannur vill	MEPZ Special Economic Zone	FTWZ	Tamil Nadu	10.03.2008
18	Mahindra	Chengleput	MEPZ Special Economic Zone	Apparel & Fashions	Tamil Nadu	26.10.2004
19	Mahindra	Chengleput	MEPZ Special Economic Zone	Auto Ancillaries	Tamil Nadu	26.10.2004
20	TCS	Siruseri	MEPZ Special Economic Zone	IT/ITES	Tamil Nadu	17.07.2006
21	Syntel	Siruseri	MEPZ Special Economic Zone	IT/ITES	Tamil Nadu	11.08.2006
22	IG3 Infra Limited (ETL Infrastructure Services Limited)	Thoraipakkam	MEPZ Special Economic Zone	IT/ITES	Tamil Nadu	11.08.2006
23	Hexaware Technologies Limited	Siruseri	MEPZ Special Economic Zone	IT/ITES	Tamil Nadu	31.08.2006
24	Shriram Properties and Infrastructure Private Limited	Chennai	MEPZ Special Economic Zone	IT/ITES	Tamil Nadu	28.09.2006
25	CHIL	Coimbatore	MEPZ Special Economic Zone	IT/ITES	Tamil Nadu	09.11.2006
26	DLF Info City	Porur	MEPZ Special Economic Zone	IT/ITES	Tamil Nadu	16.11.2006
27	Elcot	Sholinganallur	MEPZ Special Economic Zone	IT/ITES	Tamil Nadu	11.04.2007
28	Elcot	Coimbatore	MEPZ Special Economic Zone	IT/ITES	Tamil Nadu	11.04.2007
29	Estintia IT Park formely known as (L & T Arun Ecello)	Chennai	MEPZ Special Economic Zone	IT/ITES	Tamil Nadu	01.05.2007
30	Span Ventures	Coimbatore	MEPZ Special Economic Zone	IT/ITES	Tamil Nadu	10.07.2007
31	ETA Techno	Navalur	MEPZ Special Economic Zone	IT/ITES	Tamil Nadu	07.09.2007
32	Elcot	Trichy	MEPZ Special Economic Zone	IT/ITES	Tamil Nadu	12.02.2008
33	Cognizant	siruseri	MEPZ Special Economic Zone	IT/ITES	Tamil Nadu	17.12.2007
34	Elcot, Ilandhakulam	Ilanthakullam	MEPZ Special Economic Zone	IT/ITES	Tamil Nadu	09.06.2008
35	Tril Info Park	Taramani	MEPZ Special Economic Zone	IT/ITES	Tamil Nadu	23.01.2009
36	IG3 Infra Ltd	Uthukuli	MEPZ Special Economic Zone	Textile	Tamil Nadu	30.04.2008

List of  Notified Special Economic Zones in Tamil Nadu as on 31.12.2015

Sl. No	Name of the Developer	Location	Type	State code	Area (hectares)	Date of Notification
1	Flextronics Technologies (India) Private Limited	Sriperumbudur, Kancheepuram, Tamil Nadu	Electronics Hardware and related services	TN	101.21	25th April 2006
2	Tata Consultancy Services Limited	Siruseri and Egattur, Chennai, Tamil Nadu	IT	TN	28.53	17th July 2006
3	Syntel International Private Limited	Kancheepuram, Tamil Nadu	IT/ITES	TN	11.73	11th Aug 2006
4	IG3 Infra Limited (ETL Infrastructure Services Limited)	Pallikkarani Village, Tambaram Taluk, Kancheepuram, Tamil Nadu	IT/ITES	TN	10.57	11th Aug 2006
5	Hexaware Technologies Limited	SIPCOT IT Park, Old Mahabalipuram Road, Siruseri, Chennai, Tamil Nadu	IT/ITES	TN	11	31th Aug 2006
6	Shriram Properties and Infrastructure Private Limited	Perungalathur village, Chennai, Tamil Nadu	IT/ITES	TN	10/ additional 13.40.88 hectares	28th Sep 2006 / 24th Sep 2007
7	Coimbatore Hitech Infrastructure Pvt. Ltd.	Kecranatham Village, Coimbatore(N) Taluk, Coimbatore, Tamilnadu	IT/ITES	TN	34.66, additional 12.66.00	9th Nov 2006 / 17th Sep 2007/ 28th April 2009
8	DLF Infocity Developers (Cheenai) Ltd.	Manapakkam & Mulivakkam Vill.,Kancheepuram Distt. Tamil Nadu	IT/ITES	TN	13.29/3.4384/ 0.69.83	16th Nov 2006 / 19 March 2007/ 2nd December, 2008
9	State Industries Promotion Corporation of Tamil Nadu	SIPCOT Industrial area, Sriperumbudur, Tamil Nadu	Electronics or Telecom hardware and support services including trading and logistic activities	TN	189.77.1(Addi tional area 41.36.9) (de- notified are 11.83.2) =219.30.8	22th Dec 2006 & 31st July 2007 and 3rd March, 2015
10	Electronics Corporation of Tamil Nadu Limited	Village Vilankurichi, Coimbatore, Tamil Nadu	IT/ITES	TN	11.76	11th April 2007
11	Electronics Corporation of Tamil Nadu Limited (ELCOT)	Sholinganallur, Tambaram Taluka, Kancheepuram District, Tamil Nadu	IT/ITES	TN	152.66.5	11th April 2007
12	Cheyyar SEZ Developers Pvt. Ltd.	Thiruvannamalai, Tamil Nadu	Footwear	TN	111.33.50	13th April 2007
13	L&T (Arun Excello Infrastructure Pvt. Ltd.)	Vallancheri and Potheri Villages, Chengalpet Taluk, Kancheepuram District, Tamil Nadu	IT/ITES	TN	11.09.0	1st May 2007
14	Span Venture Pvt. Ltd.	Kurichi village, Eachanari, Coimbatore District, Tamil Nadu	IT/ITES	TN	10.49	10th July 2007
15	Synefra Engg. & comst.Ltd. (Suzlon Infrastructure Limited)	Karumatampatti and Kittampalayam villages, Palladam Taluk, Coimbatore District, Tamil Nadu	Hi-tech engineerigng sector	TN	104.60.40	10th Aug 2007/ 28th Nove 2007 / 7th August 2008
16	ETA Technopark Private Limited	Old Mahabalipuram Road, Navallur Village, Chengalpet Taluk, Kancheepuram District, Tamil Nadu	IT/ITES	TN	10.36804617	7th Sep 2007
17	New Chennai Township Private Limited	Seekinakuppam Village, Cheyyar Taluk, Kancheepuram District, Tamil Nadu	Engineering sector including auto ancillaries	TN	125.002	28th Sep 2007
18	State Industries Promotion Corporation of Tamil Nadu	SIPCOT of Tamil Nadu Industrial Growth Centres, Sriperumbudur Taluka, Kancheepuram District, Tamil Nadu	Electronics Hareware and related support services including trading and logistics operations	TN	140.75.50	18th Oct 2007
19	New Chennai Township Private Limited	Seekinakuppam (Paramankeni and Vellur Villages), Cheyyur Taluk, Kancheepuram District, Tamil Nadu	multi-services	TN	121.94	23rd Nov 2007
20	State Industries Promotion Corporation of Tamil Nadu	SIPCOT of Tamil Nadu Complex, Ranipet Phase-III, MukunthaRayapuram Village, Walajah Taluk, Vellore District, Tamil Nadu	Engineering	TN	104.76.00	27th Nov 2007
21	Foxconn India Developer Private Limited	Santhavelore-B, Chittur Village, Sriperumbudur Taluk, Kancheepuram District, Tamil Nadu	IT and electronics hardware	TN	10.39.00	5th Dec 2007
22	Velankani Technology Parks Pvt. Ltd.	Podavur Village, Sriperumbudur Taluk, Kanchipuram District, Tamil Nadu	electronics hardware and software and ITES	TN	57.46715	11th Dec 2007
23	Cognizant Technology Solutions India Pvt. Ltd.	SIPCOT IT Park, Siruseri and Kazhipattur villages, Chennai, Tamil Nadu	IT/ITES	TN	10.85.0	17th Dec 2007
24	State Industries Promotion Corporation of Tamil Nadu	Footwear Park, Irungattukottai, SIPCOT Industrial Park, Sriperumbudur Taluk, Kancheepuram District, Tamil Nadu	Footwear	TN	62.22	7th Feb 2008
25	SNP Infrastructure Pvt. Ltd.	Zamin Pallavaram Village, Tambaram Taluk, Kancheepuram District, Tamil Nadu	IT/ITES	TN	11.14.70	12th Feb 2008
26	Electronics Corporation of Tamil Nadu Limited (ELCOT)	Navalpattu Village, Tiruchirapalli Taluk, Tiruchirapalli District, Tamil Nadu	IT/ITES	TN	49.89.90	12th Feb 2008
27	J. Matadee Free Trade Zone Private Limited	Mannur and Valarpuram Villages, Sriperumbudur Taluk, Kancheepuram District, Tamil Nadu	FTWZ	TN	40.62.50	10th March 2008 / 21st May 2009
28	RudradevTownship Private Limited	Solankurini Village, Madurai Taluk, Madurai District, Tamil Nadu	IT/ITES	TN	31.04	22nd April 2008
29	State Industries Promotion Corporation of Tamil Nadu Limited	SIPCOT Growth Centre, Perundurai Village, Erode District, Tamil Nadu	Engineering	TN	105.44.50	23rd April 2008
30	Electronics Corporation of Tamil Nadu Limited (ELCOT)	Ilandhaikulam Village, Madurai I, Madurai North Taluk, Madurai District, Tamil Nadu	IT/ITES	TN	11.70.50	30th April 2008
31	Electronics Corporation of Tamil Nadu Limited (ELCOT)	Vadapalanji Village, Madurai South Taluk and Kinnimangalam Village, Tirumangalam Taluk, Madurai II, Madurai District, Tamil Nadu	IT/ITES	TN	86.46.50	30th April 2008
32	Electronics Corporation of Tamil Nadu Limited (ELCOT)	Jagir Ammapalayam Village, Salem Taluk, Salem District, Tamil Nadu	IT/ITES	TN	66.50.50	30th April 2008
33	State Industries Promotion Corporation of Tamil Nadu	Tirunelveli District, Tamil Nadu	Transport engineering goods including manufacture of tyres and tubes for all purposes and for transport industry sector	TN	103.23.80	15th May 2008
34	IG3 Infra Limited (ETL Infrastructure Services Limited)	Vadamugam Kangeyampalayam Village, Perundurai Taluka, Erode	Textile	TN	103.64.57	9th June 2008
35	M/s AMRL International Tech City Ltd.	Nanguneri Taluk, Tirunelveli District, Tamil Nadu	Multi-product	TN	1019.22.5	18th Nov 2008
36	Tril Infopark Ltd.	Kanagam village of Mambalam Guindy Taluk and Thiruvanmiyur village of Mylapore-Triplicane Taluk, Chennai District, Tamil Nadu	IT/ITES	TN	10.24.225	23rd Jan 2009
37	Frontier Lifeline Pvt. Ltd.	Edur Village, Gummudipundi Taluk, Thiruvallur District, Tamil Nadu	Biotechnology	TN	16.63	2nd Feb 2009
38	CCCL Infrastructure Limited	Vadakkukaracheri and Thimmarajapura Villages,Tuticorin District, Tamil Nadu	Food Processing	TN	119.145	23rd April 2009
39	Electronics Corporation of Tamil Nadu Limited (ELCOT)	Viswanathapuram Village, Hosur Taluk, Krishnagiri District, Tamil Nadu	IT/ITES	TN	70.01	4th May 2009
40	Electronics Corporation of Tamil Nadu Limited (ELCOT)	Gangikondan Village, Thrunelveli Taluk, Tirunelveli District, Tamil Nadu.	IT/ITES	TN	40.48/ 76.893	8th June 2009/ 20th December, 2011
41	Jay Gee Hitech Infraventures Pvt. Ltd	Vengadu and Pennalur Village, Sriperumbudur Taluk, Kancheepuram District, Tamil Nadu	IT/ITES	TN	11.885	4th August, 2009
42	L&T Shipbuilding Limited	Village Kattupalli, Ponneri Taluk, District Tiruvallur, Tamil Nadu	Heavy Engineering Sector	TN	317.715/2.55/ 190.525 (Total 510.89)	4th December, 2009/ 25th August, 2010/ 20th October, 2010
43	State Industries Promotion Corporation of Tamil Nadu	Uthangarai Taluk and Pochampalli Taluk, Krishnagiri District, Tamil Nadu	Granite Processing and Industries Sector	TN	153.83(58.29 de-notified = 95.54)	15th March, 2010/9th October, 2015
44	Sterlite Industries (India) Limited	Village Therkku district Tuticorin, Tamil Nadu	Copper	TN	128.805	3rd May, 2013
45	V.V. Mineral	Thiruvambalapuram village, Radhapuram Taluk, Tirunelveli District, Tamil Nadu	Mineral and Mineral based Products	TN	50.7537	16th December, 2013

SPECIAL ECONOMIC ZONE BENEFITS IN TAMIL NADU

        Sale of any goods to any registered dealer located in Special Economic Zone in the State (Tamil Nadu), if such registered dealer has been authorized to establish such units by the authority specified by the Central Government shall be Zero Rated Sale for the purpose of the Tamil Nadu Value Added Tax Act, 2006 and shall be eligible for input tax credit or refund of the amount of tax paid on the purchase of goods specified in the First Schedule including Capital goods, subject to such restrictions and conditions as may be prescribed.

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