What are SEZ's And whats the Need ?

Meaning of SEZ...its definition.
Designated areas in countries that possess special economic regulations that are different from other areas in the same country. Moreover, these regulations tend to contain measures that are conducive to foreign direct investment.
Conducting business in a SEZ usually means that a company will receive tax incentives and the opportunity to pay lower tariffs.
Or in simple words, An area where economic development is encouraged by the government.





Why Govt felt need of SEZ ?

• Absence of world-class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000.

• SEZs in India functioned from 1.11.2000 to 09.02.2006 under the provisions of the Foreign Trade Policy

• To instill confidence in investors and signal the Government's commitment to a stable SEZ policy regime and with a view to impart stability to the SEZ regime thereby generating greater economic activity and employment through the establishment of SEZs,The Special Economic Zones Act, 2005, was passed by Parliament in May, 2005 which received Presidential assent on the 23rd of June, 2005.
  
  
• After extensive consultations, the SEZ Act, 2005, supported by SEZ Rules, came into effect on 10th February, 2006,
  
  The main objectives of the SEZ Act are:
  
  (a) generation of additional economic activity
  (b) promotion of exports of goods and services;
  (c) promotion of investment from domestic and foreign sources;
  (d) creation of employment opportunities;
  (e) development of infrastructure facilities.
  
  Some Benefits Enjoyed By SEZ's are :

1. Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units.
2. 100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.
3. Exemption from Central Sales Tax.
4. Exemption from Service Tax.
5. ......And many more.