Special Economic Zone

Export Oriented Unit Scheme Meaning, Special Economic Zone Meaning, Difference between Export Oriented Unit and Special Economic Zone Introduction The SEZ program is complemented by the Export Oriented Units (EOUs) program, which was started in early 1981. The same production regime is used, but a variety of locations are available depending on factors like the availability of raw materials, ports of export, hinterland infrastructure, technological know-how, the presence of an industrial base, and the requirement for a bigger area of land for the project. This article focuses on the difference between an Export-Oriented Unit and a Special Economic Zone. Along with this, the article will outline information on the Meaning of the Export Oriented Unit Scheme, Benefits of EOU, SEZ (Special Economic Zone) meaning, and benefits of SEZ. Meaning of Export Oriented Unit Scheme EOUs are organizations that commit to exporting all of their products and services. Any organization that engages in the following activities is eligible to become an EOU: Producing, rendering services, Software creation, jewellery and item repair, reconditioning, and re-engineering, Units are involved in horticulture, agriculture, animal husbandry, poultry, biotechnology, and other related fields However, the EOU (Export Oriented Unit) Scheme plan does not apply to trading units. Benefits of EOU (Export Oriented Unit) EOU Scheme members are eligible for GST reimbursement and are allowed to buy raw materials or capital goods duty-free from both domestic and imported sources. Input Tax Credits on goods and services, as well as reimbursement for any taxes paid on fuels purchased from domestic oil companies, maybe claimed through the Export Oriented Unit Scheme. Faster clearance procedures. The production of commodities intended for the SSI sector is exempt from the need for an industrial license. Meaning of Special Economic Zone A Special Economic Zone (SEZ) is a location where businesses can operate with reduced taxes and fewer rules to follow. SEZs are limited regions located inside a nation's boundaries. However, they are regarded as foreign territory for tax purposes. Shipments from and to special economic zones are therefore handled differently than standard supply. Or to put it another way, SEZs are regarded as foreign territory even if they are situated within the same nation. Due to this, any supply to or from a developer of a special economic zone or a special economic zone unit is considered to be an interstate supply for the purposes of the GST (Goods and Service Tax) and is subject to the Integrated Goods and Service Tax (IGST). Benefits of SEZ (Special Economic Zone) SEZ units are permitted to import or get duty-free goods/materials etc. from domestic sources. All of importer's needs for capital goods, raw materials, consumables, spares, packing materials, office equipment, etc. for operating their business in the SEZ, without the need for a license or other specific sanction. Products imported or bought locally duty-free could be used for five years after approval. After paying the necessary customs duties, finished goods and by-products may be sold domestically. Domestic sales of waste, scrap, and rejected goods are permitted with payment of any applicable customs taxes. Difference between Economic Oriented Unit and Special Economic Zone Below is the table that includes information on EOU Vs SEZ: Economic Oriented Unit (EOU) Special Economic Zone (SEZ) For EOU, a minimum investment in building, equipment, and plant is Rs. 100 lakhs. Before the start of commercial manufacturing, this should happen. For SEZ (Special Economic Zone) there is no such restriction. For the clearance of imported consignments for EOU, there is a Fast Track Clearance Scheme (FTCS). For SEZ units, export and import customs clearance is achieved within the zone itself. Purchase-related Central Sales Tax (CST) is reimbursable (but not local tax). The supplier does not have to pay CST (Central Sales Tax) for SEZ units. It can be set up anywhere in India. In other words, it is not bound by the location or any boundaries across India. In SEZ, units can be set up only at the designated sites. Upon payment of the relevant customs duties, all DTA clearances are permitted (IGST, Cess, etc.). The importer or SEZ unit must file the bill of entry (on behalf of the importer) On payment of the relevant GST, all DTA clearances are accepted. Furthermore, the benefit of BCD exemption received on imported inputs utilized in the production of completed goods cleared in DTA must be forfeited or paid along with interest. Only a tax invoice needs to be generated. Conclusion Even though the creation of SEZs and EOUs was done to increase exports, there are differences between the two. An EOU may be established anywhere in the nation. SEZ, on the other hand, is a specially defined area that is considered to be outside of Customs' purview. Therefore, any sale made from within a SEZ to a DTA (Domestic Tariff Area) is constituted an export, but any sale made by an EOU to a DTA is deemed an export. Compared to sales from EOUs to DTAs, sales from SEZs to DTAs are more frequent.