SEZ for India GCC
SEZ Scheme has played a crucial role in the growth of GCC in India, offering tax incentives and other benefits. SEZ is a good option for any business wanting to set up a GCC in India.
SEZ scheme explained
SEZ (Special Economic Zone) is a geographical region treated as a deemed foreign territory. SEZs offer multiple incentives compared to the remaining domestic tariff area (DTA), making them suitable for locating 100% exporting units. India has specific laws for its SEZ.
SEZs in India are spread across the country and available in almost all major tier 1 and tier 2 Cities and IT Industry clusters. Tire1 Cities are Bangalore, Delhi-Noida-Gurgaon (Delhi National Capital Region), Chennai, Pune, Mumbai, and Hyderabad. Tire 2 Cities are Trivandrum, Kochi, Chandigarh, Jaipur, Gandhinagar, Coimbatore, Bhubaneshwar, Nagpur, etc.
One can set up an IT and BPO Offshore center or a manufacturing plant in an SEZ. Such production units set up in an SEZ are termed SEZ units. SEZ units can be set up in any Special Economic Zone (SEZ) established and notified by the Government of India.
Both the Government and private players developed SEZs with world-class infrastructure.
There are sector-specific SEZs also. Such as there are notified IT and ITeS (BPO) SEZs. A large number of Captive Offshore Centers of foreign companies, as well as a lot of Indian IT companies, have SEZ units operating in the SEZ scheme, meant for IT and ITeS.
Similarly, there are multi-sector SEZs also. Manufacturing operations can be set up in these SEZs. Also, IT and ITeS operations can be set up in multisector SEZs.
Also, a private company can set up a captive SEZ of its own or become a co-developer with an existing private SEZ.
Why set up in a Special Economic Zone after the Income Tax incentive sunset?
A business can set up a GCC or Global Delivery center or manufacturing operations to provide service in an SEZ to gain from the input side on import of both raw material and capital goods, and save on the easy GST regime in an SEZ as compared to normal operations outside an SEZ.
It is especially useful for all kinds of GCCs and manufacturing operations that tend to focus primarily on manufacturing in India and exports from India to other destinations.
Tax Incentives and facilities offered in SEZs
The incentives and facilities offered to the units in SEZs for attracting investments into the SEZs, including foreign investment, include:-
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- There is no income tax exemption available now.
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- 100% Duty-free import of capital goods for the authorised operation of the SEZ unit
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- 100% GST exempted on domestic procurement of goods and services for the authorised operation of an SEZ unit
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- 100% repatriation of profits after payment of dividend distribution tax
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- External commercial borrowing by SEZ units up to US $ 500 million in a year without any maturity restriction through recognised banking channels, allowing units to avail low-interest-rate borrowing at the international market rate.
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- Single window clearance for Central and State-level approvals.
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- Exemption from State stamp duty in many State Governments.
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- Other incentives may be available from State Governments.
