Legal Question in Business Law in India

Hi,

I need some guidance/advice pertaining to the tax incentives applicable on a One Person Company(OPC) in India if it is registered in an SEZ.

I want to start a research based technology startup and I am going with the option of One Person Company that designs electronics software and electric/mechanical instruments and licenses their design to other firms who can take up mass production..

Below are my queries..

1) Can a OPC have an office in an SEZ and avail the benefits that are offered to normal private firms.

2) if yes, what is the minimal criteria for an OPC to get entitled to the various tax benefits offered to companies in an SEZ.. Like is it enough if i register the head office at an SEZ with office space for only 2 people in the SEZ and take up actual work at some branch office.

3) Does my company strictly needs to be an IT service providing company to fit in a STPI park or even a technology/research company can also have a office there and avail the same benefits..

Thanks in advance..

Ehtesham


Asked on 2/26/15, 2:11 am

1 Answer from Attorneys
Fca Prashant Chavan Expert Edge LLP

26.02.2015

Dear Ehtesham,

Although I've already answered this question earlier, I'll answer it again :

1). Yes, a One Person Company (OPC) can have an Office in an Special Economic Zone (SEZ) and avail the benefits that are commonly offered to all Units in the SEZ;

2). Fiscal Incentives to Units in the SEZ are : (i). 100% Corporate Tax exemption for first 5 years, (ii) 50% Corporate Tax exemption for the next 10 years; (iii) Indirect Tax exemptions &; (iv) Stamp Duty exemptions (depending upon State policy);

3). SOME IMPORTANT PROVISIONS RELATING TO SEZ UNIT :

Single window clearance - Consolidated application to the UAC in Form F

Unit can undertake service activities apart from manufacturing activities. Under FTP, units were allowed to undertake only notified services and even the tax benefit was allowed only on services notified � which were typically computer related IT/ITES services. Services are defined exhaustively under Rule 76. Corporate-tax benefits are also now allowed on profit from export of all such services.

Branch of a foreign company can undertake manufacturing activities in accordance with the provisions of without prior approval of the RBI [Rule 19(7)]

Job work for overseas principal allowed. [Rule 18(6)]

No minimum export commitment on Units.

Units only to be net foreign exchange earner at the end of 5 year period and every 5 years thereafter. [Rule 52 & 53]

Validity of lease of land/facility by unit from developer to be for a minimum of 5 years [Rule 105).

Yes, A technology / research company can also have an Office in the SEZ and avail of all the benefits.

Regards,

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Answered on 2/26/15, 3:29 am


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