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What is the news?
In the Union Budget 2022, the Government has proposed to replace the Special Economic Zones (SEZs) Act,2006 with a new law.
What is the Special Economic Zones (SEZs) Act?
The Special Economic Zones (SEZs) Act was enacted in 2006 with an aim to create special economic zones.
SEZ are areas within the country that have different economic regulations and are considered foreign territory. They not only aid foreign investment, but are export hubs as well.
Units in SEZs used to enjoy 100% income tax exemption on export income for the first five years, 50% for the next five years and 50% of the ploughed back export profit for another five years.
However, these zones started losing their sheen after imposition of minimum alternate tax and introduction of sunset clause for removal of tax incentives. Moreover, the current legislation is over 16 years old.
Hence, that’s why a new SEZ law is needed.
What will be the purpose of the new SEZ law?
The new SEZ legislation will enable the states to become partners in Development of Enterprise and Service Hubs.
It will cover all large existing and new industrial enclaves to optimally utilise available infrastructure and enhance competitiveness of exports.
Source: This post is based on the article “Govt. proposes new SEZ law” published in The Hindu on 2nd Feb 2022.
