Special Economic Zone (SEZ) – TNPSC

Choose the correct statements about Special Economic Zone (SEZ):

(i) Special Economic Zones (SEZs) Policy was announced in April 2000.

(ii) Units in SEZs are allowed 100% Income Tax exemption on export income for the first 5 years.

(iii) Goods manufactured in SEZs cannot be sold in the domestic market.

(iv) SEZs aim to boost exports, attract FDI, and create employment.

(A) (i), (ii), and (iv) are correct

(B) (ii), (iii), and (iv) are correct

(C) (i), (iii), and (iv) are correct

(D) (i), (ii), and (iii) are correct

EXPLANATION

(i) Special Economic Zones (SEZs) Policy was announced in April 2000.

✅ Correct

• The SEZ Policy was formally announced in April 2000 by the Government of India.

• It aimed to overcome the shortcomings of earlier Export Processing Zones (EPZs) and promote exports more effectively.

• Later, the SEZ Act, 2005 and SEZ Rules, 2006 came into effect to provide a legal framework.

---

(ii) Units in SEZs are allowed 100% Income Tax exemption on export income for the first 5 years.

✅ Correct

• Under the SEZ Act, 2005, SEZ units are given tax incentives to attract investment.

• These include:

  • 100% income tax exemption on export income for first 5 years,

  • 50% exemption for the next 5 years,

  • and partial exemption for another 5 years on reinvested profits.

---

(iii) Goods manufactured in SEZs cannot be sold in the domestic market.

❌ Incorrect

• Goods from SEZs can be sold in the Domestic Tariff Area (DTA),
  but they are treated as imports and attract customs duties and other levies.

• Hence, it is not true that they “cannot” be sold domestically — they can, with duty payments.

---

(iv) SEZs aim to boost exports, attract FDI, and create employment.

✅ Correct

• This is the main objective of SEZs:

  • Promote exports of goods and services,

  • Attract foreign direct investment (FDI),

  • Generate employment opportunities, and

  • Develop infrastructure and industrial growth.

---

Summary Table

---

✅ Final Answer: (A) (i), (ii), and (iv) are correct