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Tanima Dutta, Lovely Professional University
                                                                        Unit 6: Tax Planning: FTZ, SEZ and 100 % EOUs



                  Unit 6: Tax Planning: FTZ, SEZ and 100 % EOUs                                 Notes


             CONTENTS

             Objectives
             Introduction
             6.1   Special Provision in Respect of Newly Established Undertaking in FTZs
                 6.1.1  Conditions to be Fulfi lled
                 6.1.2  Deductions
                 6.1.3  Consequences of Amalgamation, Demerger and Section 10 A
             6.2   Special Provision in Respect of Newly Established Undertaking
                 6.2.1  Conditions to be Fulfi lled
                 6.2.2  Amount of Deduction: A Simplifi ed Explanation
                 6.2.3  Consequences for Amalgamation and Demerger
             6.3   Special Provision in Respect of Newly Established Undertakings in 100% Export
                 Oriented Units (EOUs)
                 6.3.1  Conditions to be Fulfi lled
                 6.3.2  Deductions
                 6.3.3  Consequence of Amalgamation and Demerger
             6.4  Summary
             6.5  Keywords
             6.6  Review Questions
             6.7  Further Readings

          Objectives


          After studying this unit, you will be able to:
               Explain the special provision in respect of newly established undertaking in FTZs
               Discuss the special provision in respect of newly established undertaking in SEZs

               Describe the special provision in respect of newly established undertaking in 100% EOUs
          Introduction


          Free Trade Zone, also called Foreign-trade Zone, formerly Free Port, an area within which goods
          may be landed, handled, manufactured or reconfigured, and re-exported without the intervention

          of the customs authorities.
          Section 10AA was inserted in the Income-tax Act, 1961 by the Special Economic Zones Act,
          2005 (the SEZ Act) with effect from 10-2-2006. The section was enacted specially with respect to
          provide tax exemption to the newly established units in the Special Economic Zone (SEZ).
          The Export Oriented Unit (EOU) Scheme, which had been introduced in the early 1980s remains
          in the forefront of country’s export production schemes. The Government amended in November
          1983 a concession scheme to facilitate the setting up of Export-oriented Units (EOUs) in order to
          enable them to meet requirements of foreign demand in terms of pricing, quality, precision etc.




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