The incentives and facilities offered to the units in SEZs for attracting investments into the SEZs, including foreign investment include:-

• Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units
• 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.
• Reinvestment allowance to the extend of 50% of ploughed back profits
• Carry forward of losses
• Exemption from minimum alternate tax under section 115JB of the Income Tax Act.
• External commercial borrowing by SEZ units upto US $ 500 million in a year without any maturity restriction through recognized banking channels.
• Exemption from Central Sales Tax.
• Exemption from Service Tax.
• Single window clearance for Central and State level approvals.
• Exemption from State sales tax and other levies as extended by the respective State Governments.  

Other related provisions

• Environment Clearances: Environment Impact assessment for only 30 notified industries. Requirement for Public Hearing is exempted for SEZ
• Drugs Pharmaceuticals and Narcotics: Exemption  from Import License, Import registration and import through notified ports under Drugs and cosmetics Rules.
• Textile Policy: Not Required to register with the office of Textile Commissioner
• Companies Act, 1956: Appointment of MD/WTD/Manager with company having no/adequate profits without Central Government’s approval up to 20 lakhs per month, subject to certain conditions. No restrictions on appointment of Non resident as MD/WTD.
• FEMA :
  1. 100% FDI through automatic route except Arms, Ammunition, Atomic substances, Brewing of Alcoholic drugs, Cigars etc.
  2. Can manufacture article reserved for SSI even if foreign Equity  limits  exceed 24%.
  3. No time limit for Receipts for Exports Proceeds
  4. Netting off against Exports receivables and Import payments is allowed
  5. Direct Dispatch of documents to Foreign Buyer

The Act provides for certain fiscal incentives to developers of SEZ and units established in SEZs. Key fiscal incentives have been outlined below:

• exemption from customs duty on goods imported into the SEZ by the Developer or SEZ Unit to carry on the authorised operations;
• exemption from customs duty on goods exported from the SEZ by the Developer or SEZ Unit to any place outside India;
• exemption from excise duty on goods brought from Domestic Tariff Area ("DTA") to the SEZ by the Developer or SEZ unit to carry on the authorized operations;
• drawback or such other benefits (as may be admissible from time to time) on goods brought from the DTA into a SEZ by the Developer or Unit to carry on the authorized operations;
• exemption from service tax on taxable services provided to a Developer or Unit to carry on the authorized operations in a SEZ. However, please note that there is no specific service tax exemption on services provided by a Developer of an SEZ or a SEZ Unit. Exemption, if any, would be as per the service tax legislation;
• exemption from the securities transaction tax in case the taxable securities transactions are entered into by a non-resident through the International Financial Services Centre ("IFSC");
• exemption from levy of Central Sales Tax on the sale or purchase of goods by the Developer or SEZ unit if such goods are meant to carry on the authorized operations;
• Local sales tax/ VAT exemption or concession on supply of goods to an SEZ Developer or Unit or sale of goods by an SEZ Developer or Unit is subject to the respective sales tax/ VAT legislation of the state in which the SEZ is set up.
• Investment made by individuals etc in a SEZ co also eligible for exemption u/s 88 of IT Act
• Developer permitted to transfer infrastructure facility for operation and maintenance.
• Generation, transmission and distribution of power in SEZs allowed
• Full freedom in allocation of space and built up area to approved SEZ units on commercial basis.
• Authorised to provide and maintain service like water, electricity, security, restaurants and recreation centres on commercial lines.
• 100% FDI allowed for townships with residential, educational and recreational facilities on a case to case basis, and franchise for basic telephone service in SEZ.
• Income Tax benefit under ( 80 IA ) to developers for any block of 10 years in 15 years
• Duty free import/domestic procurement of goods for development, operation and maintenance of SEZs.