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Special Economic Zones & Service Tax Issues & Implications
January, 29th 2009
Special Economic Zones (SEZs) are designated duty free enclaves which are considered as deemed foreign territories for the purpose of trade operations, duties and tariffs. Several exemption and concessions to SEZ developers and SEZ units from various taxes and duties have been granted by the Government with a view to boost exports and investments. Tax benefits promised to SEZs by the Government has never been free from ambiguities. As regards service tax, the perception has been that SEZ developers and SEZ units enjoy complete exemption from service tax and that there are no service tax implications. However, it would be interesting to note that there are certain restrictions to this exemption and the provisions of SEZ Act and the Service Tax legislations are not in consonance with each other.
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