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Draft Development of Enterprise and Service Hubs (DESH) Bill - Coggle…
Draft Development of Enterprise and Service Hubs (DESH) Bill
What are SEZs?
located within a country’s national borders
Work as export hubs
Business and trade laws are different from the rest of the country
Companies are offered tax holidays
DESH bill to replace SEZs
SEZs in India
SEZ Act 2005 was enacted
100% income tax exemption on export income for the first five years, 50% for the next five years
To enhance foreign investment and provide an internationally competitive and hassle-free environment for exports
50% of the ploughed back export profit for another five years
Inception on April 1, 2000
Why replace the existing SEZ Act?
It distorts market prices
Illicit tax benefits to exports through SEZs
Started losing their allure after the introduction of minimum alternate tax and a sunset clause
Inconsistent with WTO rules
How is the DESH legislation different?
No longer be required to be net foreign exchange positive
WTO-compliant
Focus on boosting domestic manufacturing and job creation
Online single-window portal
It goes beyond promoting exports
Will it be easier to sell in the domestic market?
No mandatory payment requirement in forex
Current SEZ regime, duty is paid on the final product
Government may impose an equalization levy
Duties only to be paid on the imported inputs and raw materials instead of the final product
What role will states play in DESH?
States will be able to participate
State boards would be set up to oversee the functioning of the hubs
SEZ regime, most decisions were made by the commerce department at the Centre
Powers to approve imports or procurement of goods, and monitor
DESH is expected to play a larger role, definitely.
Way forward
Effective implementation
Address the critical gaps in existing SEZ law