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SEZ Compliance Made
Easy with Expert
Solutions

Navigating India's Special Economic Zones (SEZ) regulations can be complex. Our expert team offers comprehensive services to ensure your business stays compliant, from registration to tax exemptions and export obligations.

  • Tailored Compliance Services
  • Timely Reporting & Filings
  • Customs, Tax & FDI Support

Stay compliant, focus on growth. Contact us
today to get started!

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Special economic Zone and its statutory
compliances

A Special Economic Zone (SEZ) is an area in which business and trade laws are different from the rest of the country. Almost every
enterprise, which is in the business of production, manufacturing, exporting, and importing of goods wish to establish their business
unit in these Special Economical Zones. However, to establish a business unit in these SEZs, one needs to take government approval.
Once it’s registered as unit in SEZ, apart from the other laws, the unit should comply with the statutory filing requirement of SEZ Act
2005 and the other allied rules.

SEZs play a key role in rapid economic development of a country. In the early 1990s, it helped China and there were hopes (perhaps
never very high ones, admittedly) that the establishment in India of similar export-processing zones could offer similar benefits —
provided, however, that the zones offered attractive concessions.

The Special Economic Zone is constituted under The Special Economic Zone Act, 2005 and came into force with effect from 2006. The
SEZs Rules, inter-alia, provide for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments.

We act as one stop source to all the requirements of a SEZ/STPI registered unit or the unit which is proposing to become a SEZ/STPI
unit.

Key SEZ Compliance Requirements

1. SEZ Registration

Before setting up operations in an SEZ, businesses must complete the registration process with the relevant authorities. This includes applying for SEZ status and obtaining approval from the Development Commissioner.

2. Annual Compliance Reporting

Companies operating in SEZs are required to submit periodic reports to the authorities detailing their operations, including exports, imports, and financial performance.

3. Maintaining Proper Documentation

Businesses must maintain detailed records of transactions, including export and import documents, contracts, and financial statements. These records must be made available for audit purposes.

4. Adherence to Export Obligations

SEZ units are obligated to meet export targets set by the authorities. Non-compliance with export obligations may lead to penalties or the withdrawal of SEZ status.

5. Customs and Duty Exemption Compliance

Companies must ensure that they comply with customs rules to avail duty exemptions on imports and exports within the SEZ. Proper filing of documents is essential to avoid issues with customs authorities.

6. Environmental and Labor Compliance

SEZ units must comply with environmental standards and labor laws. Regular audits and inspections are conducted to ensure businesses are meeting these standards.

7. Corporate Tax Compliance

SEZs offer tax benefits such as income tax exemptions and reduced rates. However, businesses must file tax returns and follow the guidelines for claiming these exemptions.

8. Special Reporting and Approvals for Foreign Direct Investment (FDI)

Foreign investments in SEZs require adherence to FDI guidelines, including reporting and approvals from the Reserve Bank of India (RBI) and the Ministry of Commerce and Industry.

We provide the following services pertaining to SEZ
activities

  • checkmark Legal Setting up of SEZ unit and execution of various agreements/undertakings at the time of SEZ unit registration.
  • checkmark Day to day and yearly compliances like filing and registration of contracts/ purchase orders, filing of Softex Forms
  • checkmark Monthly performance reports
  • checkmark Annual Performance Reports
  • checkmark Periodical forms, returns and statements with the STP authorities.
  • checkmark Filing of Service Exports Reporting form and helping of the unit for getting approval from the unit approval committee for various matters like extension of space, approval of changes in the shareholding and change of registered office etc.
  • checkmark Tax advisory services to the SEZ units on their day to day transactions, transfer pricing activities etc.

Why Choose Us

At Targolegal ,we understand the intricacies of SEZ compliance and offer a range of services to help businesses meet regulatory
requirements. Our team of experts ensures that your SEZ operations are always in line with current laws and regulations.

  • Tailored Compliance Solutions: We provide customized solutions based on your industry, size, and specific SEZ requirements.
  • Timely Reporting and Filings: We ensure all necessary reports are submitted on time, helping you avoid penalties or legal issues.
  • Comprehensive Documentation Support: We assist in maintaining the required documentation for audits, approvals, and reporting.

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FAQ

What is an SEZ, and why should my business consider setting up in one?

An SEZ (Special Economic Zone) is a designated area in India aimed at promoting industrial growth and attracting foreign investments. It offers various benefits such as tax exemptions, duty-free imports, and simplified regulations. Setting up in an SEZ can help businesses reduce operational costs and boost exports.

What are the key compliance requirements for businesses in SEZs?

Key compliance requirements include: Registration and approval from the Development Commissioner Maintaining proper documentation and financial records Adhering to export obligations Filing regular reports on exports, imports, and finances Complying with tax and customs regulations Following environmental and labor laws

How do I register my business in an SEZ?

To register, you must apply to the SEZ Development Commissioner with the required documentation, including your business plan, export details, and financial statements. Upon approval, you will receive SEZ status, allowing you to avail of benefits.

What are the export obligations for SEZ units?

SEZ units are required to meet export targets set by the authorities. These obligations must be fulfilled within a specified period to maintain SEZ status and continue enjoying the associated benefits.

What tax benefits are available for SEZ units?

SEZ units enjoy various tax benefits, such as: Exemption from income tax for the first five years 50% tax exemption for the next five years Reduced tax rates for the following five years Exemption from central sales tax (CST), customs duties, and other levies on imports

Are there any penalties for non-compliance with SEZ regulations?

Yes, non-compliance can result in penalties, withdrawal of SEZ status, or other legal actions. It’s crucial to fulfill export obligations, file reports on time, and maintain the required documentation.

How often do I need to file compliance reports for SEZ?

Compliance reports are typically required to be filed annually, detailing exports, imports, financial performance, and adherence to SEZ regulations. The frequency may vary based on specific SEZ policies.

Do I need to pay customs duties on goods imported into an SEZ?

Goods imported into an SEZ are generally exempt from customs duties and taxes. However, businesses must ensure that all required documentation is submitted for customs clearance to avail these benefits.

Can foreign companies invest in SEZ units?

Yes, foreign direct investment (FDI) is permitted in SEZ units, subject to FDI guidelines and regulatory approvals from the Reserve Bank of India (RBI) and other authorities.

What are the labor and environmental compliance requirements for SEZ units?

SEZ units must comply with labor laws, including employee welfare and working conditions. Environmental regulations also apply, ensuring that businesses maintain sustainable operations within the SEZ framework. Regular inspections and audits may be conducted to ensure adherence.

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