SEZ Investments Prove to be More Effective for Companies and Economy

Special Economic Zones or SEZ was introduced in April 2000. It is an area present within the country and encompasses special economic regulation that might be different from other regions. Performing business in an SEZ generally means that organizations will avail tax incentives while paying lower tariffs. SEZ zones are built to promote economic growth by using tax incentives to attract technological advancements and foreign exchange incentives.

The government administrates the statutory functions of SEZs. Moreover, it also oversees the operations and maintenance of many government-oriented SEZs. The functioning of SEZs is managed by a government-approved committee that includes development commissioners, representatives of state government, and customs officials. The committee evaluates the performance of SEZs on an annual basis and based on the report, make further policy changes.

Where are SEZs Situated in India?

Presently eight SEZ centers are functioning in India located in the following regions:

• Santa Cruz, Maharashtra
• Kandla and Surat, Gujarat
• Cochin, Kerala
• Visakhapatnam, Andhra Pradesh
• Chennai, Tamil Nadu
• Noida, Uttar Pradesh
• Falta, West Bengal

Along with these centers, 18 approvals have been granted by the government to set up SEZs in Navi Mumbai, Positra, Nanguneri, Kopata, Kulpi, and Salt Lake, Jaipur and Jodhpur, Hassan, etc.

Investments in India has Become More Attractive with SEZ India Invest

Recently, the government revised the slab for MAT or altered minimum tax, making it proportionate to claiming holiday taxes. This revision has made SEZ a prolific investment opportunity.

A new provision has been introduced in the Income Tax Act to facilitate growth and investment in the country. Within the rule, domestic organizations can pay income tax at the rate of 22%, if they don't claim for any incentive or exemption.

Moreover, the companies must have an effective tax rate of at least 25.17%, which include cess and surcharge. Additionally, there is no need for companies to pay MAT as well. New SEZ India Investment before March 31st, 2020 could be highly beneficial as there will be reduced corporate tax for manufacturing organization (15%) and other segments, it will be for 22%.

Companies can choose not to claim the holiday tax and obtain a reduced corporate tax rate without any implications of MAT.

Companies that operate under the SEZ India can benefit from the reduced tax rate of 22% without claiming the holiday tax. In fact, even if the companies are not under SEZ, there has been a reduction in the tax burned as the MAT rate has been down from 18.5% to 15%.

After March 31st, 2020, SEZ invest would be deemed as a profitable option with the kind of benefits it is rendering the enterprises. With this tax reform, SEZ Indian could be an active destination for export-centered companies. The investment in SEZ last year went up to INR 5 lakh crores, and in the coming years, we can expect this number to grow significantly. By improving the SEZs policies, the country can pave the way for higher economic growth and strengthen its global footprints.

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