SEZs are major export hubs in the country as the government provides several incentives including tax benefits and single-window clearance system. The developers and units of these zones enjoy certain fiscal and non-fiscal incentives such as no licence requirement for import; full freedom for subcontracting; and no routine examination by customs authorities of export/import cargo. They also enjoy direct and indirect tax benefits.
The Special Economic Zones (Amendment) Bill, 2019 became the first legislation to be passed by the newly-constituted 17th Lok Sabha. Union Commerce and Industry Minister Piyush Goyal said the Bill, which would replace an ordinance, was aimed at improving and encouraging more investments and introducing features including single-window clearance and to ease imports and exports. “To attract both domestic and international investors, the Prime Minister wants to keep up with the evolving business environment,” Mr. Goyal said, introducing the legislation. “To this effect, we want to add alternative investment funds trust in the definition of persons,” he added.
The bill has now been passed by both the houses; Rajya Sabha too has passed the bill by a voice vote of “ayes and nos”.
Salient feature of this bill
“As the trusts or entities are very common form of operating bodies in the financial sector, it has become necessary to amend clause (v) of section 2 of the Act.”, said the “statement of objects and reason” to the bill.
It amends the Special Economic Zones Act, 2005 and replaces an Ordinance that was promulgated on March 2, 2019. The Act provides for the establishment, development and management of Special Economic Zones for the promotion of exports.
How it changes the act
Under the Act, the definition of a person includes an individual, a Hindu undivided family, a company, a co-operative society, a firm, or an association of persons. The Bill adds two more categories to this definition by including a trust, or any other entity which may be notified by the central government.
The bill will amend the Act which provides for the establishment and management of Special Economic Zones for the promotion of exports.
The Bill adds more categories to the definition of a person under the Act by including a trust or any other entity which may be notified by the Central government. The existing definition includes an individual, a Hindu undivided family, an association of persons, a company, a co-operative society, a firm or a proprietary concern.
In a nutshell, only a clause of the act is being amended. Trusts now can approach the government to set up units in special economic zones as the Cabinet has approved the promulgation of an Ordinance for amendment to the SEZ Act, 2005. The definition of “person” as defined in the SEZ Act would now to include trust. The present provisions of the Act do not permit ‘trusts’ to set up units in SEZs.
How effect the beneficiaries
The amendment will enable a trust to be considered for grant of permission to set up a unit in SEZs. The amendment would also provide flexibility to the central government to include ‘trusts’ in the definition of a ‘person’, any entity that the central government may notify from time to time. This will facilitate investments in SEZs.
