1) Services rendered to the units in SEZ’s / incentives and facilities provided ?

 Duty free import/domestic procurement of goods for development, operation and

maintenance of SEZ units
 Exemption from Central Sales Tax, Service Tax and State sales tax. These have
now subsumed into GST and supplies to SEZs are zero rated under IGST Act,
2017.
 Other levies, if exempted by the respective State Governments.
 Single window clearance for Central and State level approvals.
 Supplies to SEZ are zero-rated under IGST Act, 2017.

https://pib.gov.in/newsite/PrintRelease.aspx?relid=96977

2) Procedure for setting up of units in SEZ

 A consolidated application seeking permission for setting up of a Unit and other
clearances, including those given in [17(1) of the SEZ Rules), shall be made to
the DC1 (in Form F of the SEZ Rules), with a copy to the Developer: —
 The DC shall get the proposal scrutinised and get it placed before the Approval
Committee for its consideration.
 The Approval Committee shall meet once in every fortnight on a fixed
predetermined day.
 The proposals received [under clauses (c) & (e) of sub-section (2) of section 9 2 of
the SEZ Act] shall be placed before the BOA3 by the DC for its consideration.
 The Approval Committee may approve or approve with modification or reject a
proposal placed before it, within 15 days, where the approval is to be granted by
the Board, the Board shall approve or approve with modification or reject such
proposal within 45 days of its receipt:
 The Approval Committee shall approve the proposal if it fulfils the criteria such
as meeting NFE 4, availability of space, conforming to pollution norms, contact
and personnel information, barring of specified activities etc. [sub rules 2, 3,4,5,6
of Rule 18.]
 On approval of the proposal, the DC shall issue a Letter of Approval (in Form G)
for setting up of the units.

3) Procedure for setting up of SEZ

 Developers must submit a proposal in Form 'A' to the concerned Development
Commissioner (DC) specified in Annexure-III of SEZ Rules.

1
Development Commissioner
2
(c) granting of approval to the Developers or Units (other than the Developers or the Units which are
exempt from obtaining approval under any law or by the Central Government) for foreign
collaborations and foreign direct investments (including investments by a person resident outside
India), in the Special Economic Zone for its development, operation and maintenance ; (e) granting,
notwithstanding anything contained in the Industries (Development and Regulation) Act, 1951 (65 of
1951), a licence to an industrial undertaking referred to in clause (d) of section 3 of that Act, if such
undertaking is established, as a whole or part thereof, or proposed to be established, in a Special
Economic Zone;
3
Board of Approval
4
Net Foreign Exchange
  The DC, within 15 days, forwards the proposal to the Board of Approval (BOA)
along with an inspection report, State Government's recommendation, and necessary
details for SEZ declaration.
 State Governments are required to forward proposals to BOA, along with
recommendations, within 45 days of receiving them. Compliance with Rule 5 of SEZ
Rules is crucial, and relevant notifications issued by the State Government must be
attached.

 If BOA approves a proposal, the person must obtain State Government concurrence
within 6 months from the date of approval.

 The Central Government, upon receiving communication, must grant formal or in-
principle approval within 30 days.

4) Requirements/criteria for land area for IT / ITES

The identified area for an SEZ must be contiguous, vacant and have no public thoroughfare.
The definition of vacant land as per the SEZ Rules are that there are no functional ports,
manufacturing units, industrial activities or structures in which any commercial or economic
activity is in progress.

In terms of land area requirements, an SEZ other than a SEZ for Information Technology(IT)
or IT enabled services, Biotech or Health (other than hospital) service, shall have a
contiguous land area of 50 hectares or more.

There shall be no minimum land area requirements for SEZ for IT or IT-enabled services,
biotech or health (other than hospital), but a minimum built up processing area requirement
shall be applicable, based on category of cities [Given in detail in Annexure IV(a) of the SEZ
Rules]
1. Category’A’ – 50,000 sq. mts.
2. Category’B’ – 25,000 sq. mts.
3. Category’C’ – 15,000 sq. mts.
The minimum processing area in any SEZ cannot be less than 50% of the total area of SEZ.

5) The below mentioned are the exemptions given by the State Government to the SEZs:
The State Government is not mandated but shall endeavour that the following are made
available in the State to the proposed SEZ Units and Developer, namely: -
 Exemption from the State and local taxes, State Goods and Services Tax, levies and
duties including stamp duty, and taxes levied by local bodies on goods required for
authorized
 operations by a Unit or Developer, and the goods sold by a Unit in the DTA except
the goods procured from Domestic Tariff Area (DTA) and sold as it is
 Exemption from electricity duty or taxes on sale, of self-generated or purchased
electric
 power for use in the processing area of a SEZ
 Allow generation, transmission and distribution of power within a SEZ
 providing water, electricity and such other services, as may be required by the
developer be provided or caused to be provided
  Delegation of power to the DC under the Industrial Disputes Act, (No. 14 of 1947)
and other related Acts in relation to the Unit and workmen employed by the
developer.
 Declaration of the SEZ as a Public Utility Service under the Industrial Disputes Act,
(No.14 of 1947)
 Providing single point clearance system to the Developer and unit under the State
Acts and rules;

AMENDMENT

According to the new amendment the BOA, on request of a developer of an IT/ITES SEZ may, permit
the demarcation of a portion of a built-up area within an SEZ unit on a floor–by–floor basis as a
non-processing area.

Relevance: A non-processing area may be used for setting up and operation of businesses
engaged in IT/ITES, and at such terms and conditions as may be specified by the Board of
Approval5.

The processing area in an SEZ is where units are located for manufacture of goods or rendering of
services. Non-processing area is where supporting infrastructure is created.

Demarcation of a non-processing area shall not be allowed if it results in decreasing the processing
area to less than fifty per cent of the total area or less than the area specified, according to the
notification.The minimum built-up processing area in Category A, Category B and Category C cities
have to be 50,000 sq m, 25,000 sq ms and 15,000 sq m, respectively.

Non-processing area shall consist of complete floor and part of a floor shall not be demarcated as a
non-processing area, the notification further specified.

 The BOA on request of developer may permit the demarcation of a portion of the built-up
area of an IT/ITeS SEZ as a non-processing area subject to repayment of taxes.
 Non-SEZ IT/ITeS businesses shall not avail any rights or facilities available to SEZ units and
these businesses operating out of the said non-processing area would continue to comply with
all other regulations as are applicable to an entity operating in a Domestic Tariff Area.

KEY FEATURES OF THE AMENDMENT:

 Allowing non-SEZ IT/ITeS businesses to operate in the non-processing built-up area of

the SEZ, subject to obtaining consent from the Board of Approval (BOA)
 Repayment of proportionate tax benefits availed by the developers on the demarcated
non-processing area
 Minimum built-up processing area to be maintained by the developers depending on
category of cities
 Control measures in relation to operations of SEZ units and non SEZ IT/ITeS businesses
to be put in place

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notification issued on December 6 by the Commerce and Industry Ministry.
  Repayment of tax benefits already availed on common infrastructure that would be
accessed by SEZ units and non-SEZ IT/ITeS businesses
 No tax benefits would be available on a continuing basis on the operations and
maintenance cost in relation to the common infrastructure.

Benefits of the Amendment

It would by unlock vacant spaces in operational SEZs for the establishment of Domestic Tariff Area
(DTA) units, boosting industry.

Revised policy not only facilitates the expansion of companies’ office spaces but also extends the
benefits of SEZ areas to Non-SEZ entities6.

Integration between SEZ and non- SEZ entities.

The revision will infuse new office supply since the adaptability provided by floor-wise denotification
offers various leasing prospects and will contribute to increased office occupancy rates in SEZ assets

amendment will further elevate the attractiveness of our 20 msf premium grade-A SEZ office spaces,
positioning Embassy REIT on a trajectory towards achieving pre-COVID occupancy levels

6
https://www.thehindubusinessline.com/news/real-estate/developers-reits-cheer-amendments-in-sez-rules-
expect-occupancies-to-rise/article67614187.ece