Deduction for Profits from Business of Developing a Special Economic Zone (SEZ) [Section 80-IAB]
• Developers of SEZ can claim a deduction for profits and gains from the operation and maintenance of SEZ.
• Deduction available for 100% profits for 10 consecutive assessment years out of 15 years from commencement.
• Deduction amount is computed assuming the eligible business is the sole income source for the previous year.
• No deduction if development of SEZ begins on or after 1st April 2017.
• SEZ must be notified by the Central Government on or after 1st April 2005.
• Development must begin on or before 31st March 2017.
• SEZ notified on or before 31st March 2005 is not eligible here; such deduction is available under Section 80-IA.
• Deduction claim under this section requires books of account audited by a Chartered Accountant. Audit report to be furnished electronically in Form 10CCB one month before the due date of furnishing the return of income under section 139(1).
• Profit must not exceed reasonably expected; AO may recompute income.
• Transfer pricing norms apply to specified domestic transactions.
• Return of income must be filed within the due date under Section 139(1) to claim a deduction.
• Deduction cannot be claimed under any other provision of ‘Chapter VI-A under the heading C’ (Section 80HH to 80RRB). Further, the deduction amount shall not exceed the profits and gains of the eligible business.
• If the operation/maintenance of the SEZ is transferred to another developer, the transferee is allowed a deduction for the remaining period of 10 years as if no transfer occurred.
• The same applies to the amalgamation or demerger of SEZ developer Indian companies.