The Ministry of Commerce and Industry (‘Ministry”) has issued the Special Economic Zones (Fifth Amendment) Rules, 2023 (“Fifth Amendment”) to insert provisions relating to “non-processing areas for Information Technology or Information Technology Enabled Services Special Economic Zone”.
Key Takeaways:
- The Board of Approval, on request of a Developer of an Information Technology or Information Technology Enabled Services Special Economic Zones, may, permit demarcation of a portion of the built-up area of an Information Technology or Information Technology Enabled Services Special Economic Zone as a non-processing area of the Information Technology or Information Technology Enabled Services Special Economic Zone to be called a non-processing area.
- The non-processing area may be used for setting up and operation of businesses engaged in Information Technology or Information Technology Enabled services, and at such terms and conditions as may be specified by the Board of Approval
- A Non-processing area should consist of complete floor and part of a floor shall not be demarcated as a non-processing area.
- Appropriate access control mechanisms have to be implemented for Special Economic Zone Unit and businesses engaged in Information Technology or Information Technology Enabled Services in non-processing areas of Information Technology or Information Technology Enabled Services Special Economic Zones, to ensure adequate screening of movement of persons as well as goods in and out of their premises.
- Board of Approval should permit demarcation of a non-processing area for a business engaged in Information Technology or Information Technology Enabled Services Special Economic Zone, only after repayment, without interest, by the Developer:
- tax benefits attributable to the non-processing area, calculated as the benefits provided for the processing area of the Special Economic Zone, in proportion of the built up area of the non-processing area to the total built up area of the processing area of the Information Technology or Information Technology Enabled Services Special Economic Zone, as specified by the Central Government.
- tax benefits already availed for creation of social or commercial infrastructure and other facilities if proposed to be used by both the Information Technology or Information Technology Enabled Services Special Economic Zone Units and business engaged in Information Technology or Information Technology Enabled Services in non[1]processing area.
- The amount mentioned above will be based on a certificate issued by a Chartered Engineer.
- Demarcation of non-processing area must not be allowed if the processing area decrease to less than 50 per cent of total area or less than the area as specified in the table below:
- The businesses engaged in Information Technology or Information Technology Enabled Services Special Economic Zone in a non-processing area should not avail any rights or facilities available to Special Economic Zone Units.
- No tax benefit will be available on operation and maintenance of common infrastructure and facilities of such an Information Technology or Information Technology Enabled Services Special Economic Zone.
- The businesses engaged in Information Technology or Information Technology Enabled Services Special Economic Zone in a non-processing area shall be subject to provisions of all Central Acts and rules and orders made thereunder, as are applicable to any other entity operating in domestic tariff area.”
Please refer to the attached notification for a detailed read of the Third Amendment.
Source: Ministry of Commerce and Industry
