SEZ - Special Economic Zones
EOU - Export Oriented Units
STP - Software Technology Park

For promotion of export of goods and services from India, Government of India, has set up specific zones. Companies operating from these zones are entitled to bunch of incentives.

FACILITIES AVAILABLE TO UNITS IN THE SEZs?

CUSTOMS RELATED:

• SEZ units have to be a net foreign exchange earner. No minimum performance requirement.
• No license required for import.
• Exemption from custom duty on import of capital goods, raw materials, consumables etc.
• Exemption from Central Excise Duty on procurement of capital goods, raw materials etc. from the domestic market.
• Supplies from DTA (Domestic Tariff Area) to SEZ will be treated as deemed exports.
• Reimbursement of Central Sale Tax (CST) on inter-State purchases.
• Reimbursement of duty paid on Furnace oil as per Drawback rate notified by DGFT.
• Trading activity for exports permitted.
• Fast track clearance of imports and exports.
• In-house Custom clearance.
• Ready infrastructure.
• Duty free goods to be utilized within the approval period of 5 years.
• No separate documentation required under Customs and Exim Policy.

100% foreign direct investment is under the automatic route is allowed in manufacturing sector in SEZ units except arms and ammunition, explosive, atomic substance, narcotics and hazardous chemicals, distillation and brewing of alcoholic drinks and cigarettes , cigars and manufactured tobacco substitutes. No cap on foreign investments for SSI (Small Scale Industries) reserved items.

TAX RELATED:

Attractive tax holiday upto 2010 as per Section 10A of the Income Tax Act.

100 Percent Export Oriented Unit ("EOU"): In terms of the benefits available, the EOU scheme, on a general basis, is similar to SEZ scheme. But in this scheme, there is no need to be physically located in the designated area (as in the case of SEZs). This scheme offers zero import duty on import of all capital goods, special 10 years income tax rebate (however, such rebate will not be available for Assessment Year 2010-2011 and onwards). The incentives provided to EOUs are generally similar to those provided to SEZ units, except the exemption from central sales tax on purchases.

Software Technology Park

Software Technology Park ("STP"): This is a special scheme under the Ministry of Information Technology, similar to EOU scheme, which is specific for the software industry. STPs are located at Noida, Navi Mumbai, Pune, Gandhinagar, Hyderabad, Bangalore, Chennai, Bhubaneshwar, Jaipur, Mohali and Thiruvanathapuram. This scheme offers zero import duty on import of all capital goods, special 10 years income tax rebate (however, such rebate will not be available for Assessment Year 2010-2011 and onwards), availability of infrastructure facilities like high-speed data communication links, etc. The incentives provided to EOUs are generally similar to those provided to SEZ units, except the exemption from central sales tax on purchases.