Special Economic Zones in India
What SEZs Offered and What Changed
Firms once enjoyed multi-year income tax holidays, and later rules cut some benefits, including the removal of the direct tax holiday for new units.
Incentives shifted over time.
Original package
Income tax exemption for several years, duty-free imports and exemption from some indirect taxes.
Minimum alternate tax
Later, taxes such as MAT and dividend distribution tax reduced the appeal.
Sunset
The income tax holiday for new units ended after March 2020.
Impact
Many developers found their business model weakened.
A benefit ends
A unit set up after the cut-off no longer receives the income tax holiday.
Assuming policy stays unchanged
Incentives can be withdrawn.
Key takeaways
- Tax holidays were the main draw.
- MAT and other taxes reduced appeal.
- Holidays for new units ended in 2020.
- Developers were affected.
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