Export Oriented units: Fiscal & Tax Concessions

Some incentives given to EOUs

  • No import licences are required by the EOU units and import of all industrial inputs exempt from customs duty.
  • Supplies from the DTA to EOUs are regarded as deemed exports and are hence exempt from payment of excise duty which means that high quality inputs are available at lower costs.
  • On fulfillment of certain conditions, EOUs are exempted from payment of corporate income tax for a block of 5 years in the first 8 years of operation. Export earnings continue to be exempt from tax even after the tax holiday is over.
  • Industrial plots and standard design factories are available to EOUs at concessional rates.
  • Single window clearance for EOU. For example, the State Government of Kerala as well of Karnataka has constituted single window clearance mechanisms such as District Single Window Clearance Board (in Kerala) and Karnataka Udyog Mitra (in Karnataka) for the purpose of speedy issue of various licences, clearances.
  • Private bonded warehouses in the 7 EPZs can be set up for
    • Import and sale of goods including in the DTA, subject to payment of applicable duties at the time of sale.
    • Trading including re-export after repacking/labeling.
    • Re-export after repair, reconditioning or re-engineering
  • EOUs and EPZs are permitted to sub-contract part of their production processes for job work to units in the DTA on a case by case basis.
  • Supplies to the DTA under international competitive bidding against payment in foreign exchange to other EOUs and EPZ units and against import licenses are considered towards fulfilment at the export obligation.
  • The FOB value of exports of EOUs and EPZ units can be clubbed with that of parent companies located in the DTA for the purpose of obtaining a Trading or Export House status.
  • EOUs and EPZ units may export goods through Trading and Export Houses or other EOU and EPZ Units.

Attractive Policy Provisions for EOUs:

  • EOU can also import second hand capital goods without any age limit.
  • 50% of physical exports can be sold in domestic market on payment of concessional duty.
  • EOUs can process and export rice (Basmati & Non-Basmati).
  • EOUs including Gem & Jewellery units are permitted to sub-contract upto 50% of their production (or) production process in DTA / other EOUs.
  • EOUs are allowed to utilize plant and machinery for job work DTA units provided the goods are exported directly from the EOU premises.
  • EOUs in Agriculture and allied sectors and in granite sector may transfer the capital goods and the inputs to the Farms/field/quarries for usage relating to the production in the EOU.
  • In case of new EOUs, Advance DTA sale will be allowed not exceeding 50% of its estimated exports for the first year except the pharmaceutical units where this will be based on its estimated exports for the first two years.
  • Simultaneous Advance DTA sale permission is given on quarterly basis for perishable goods like mushrooms, cut flowers etc.
  • Exports through third party is permitted
  • Exports from the job workers premises is allowed
  • 100% FDI investment permitted through Automatic Route similar to SEZ units
  • EOUs can obtain Foreign currency loans from OBUs situated in the SEZs
  • EOUs have to achieve only positive Net Foreign Exchange (NFE) within 5 years i.e., A – B > 0 where (A) is the FOB value of Exports and (B) is CIF value of imports.

Fiscal Incentives available to 100% EOUs:

  • Exemption from Customs and Central Exciuse duties on import/local procurement of Capital goods, raw materials, consumables, spares, packing material etc.
  • Reiumbursement of Central Sales Tax (CST) on purchases made from Domestic Tariff Area (DTA)
  • Corporate Tax Holiday upto 2010
  • CENVAT credit on Service Tax paid
  • Re-iumbursement of duty paid on fuels procured from domestic oil companies as per the rate of Drawback notified by the DGFT from time to time.

Special Package of Incentives for Star Export House EOUs (Fast Track Clearance):

  • Permissions and Customs clearances for both Imports and Exports on self declaration basis.
  • Fixation of Input-Output norms on priority within 60 days.
  • Exemption from compulsory negotiation of documents through Banks.
  • 100% retention of foreign exchange in EEFC account.
  • Enhancement of normal repatriation period from 180 days to 360 days.
  • Exemption from furnishing of Bank Guarantee in Schemes under this policy.
  • Exemption from examination of Import Cargo
  • Install one Fax machine & Two computers in their Administrative/Registered Office on prior intiation only.
  • Procurement of DG set intimation to the Development Commissioner/Jurisdictional Customs/Central Excise authority
  • Remove their Capital goods (or) part thereof for repairs under prior intimation to the jurisdictional Asst./Deputy Commissioner of Customs & Central Excise authority
  • DTA clearance of rejects on priority basis
  • Personal carriage of samples of Gems & Jewellery without a need for prior permission
  • DTA sale of finished products on prior intimation only
  • Participation in exhibition for export promotion on prior intimation only 

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