FAQs on COVID-19 Special Relaxation Measures for SEZ Units

In the present scenario of complete lockdown in the country to curb the spread of COVID-19, SEZs units engaged in manufacturing of essential items like drugs, pharmaceuticals or hospital equipment are operational to ensure these critical supplies are not disrupted.

In order to support the hardship encountered, the Department of Commerce has therefore decided to provide suitable relaxations on compliances to be met by units/developers / co‐developers of Special Economic Zones(SEZs) to ensure that there is no hardship to Developer/Co-Developer/Units in cases where compliances were not met within due date due to COVID-19

Source: PIB Delhi dt. 30.03.2020 & 31.03.2020 & 11.04.2020

The Taxation and Other Laws (Relaxation of certain provisions) ordinance, 2020 ft. 31.03.2020

Special Relaxation Measures for SEZ Units on COVID-19

What are all the relaxations provided to units/developers / co‐developers of Special Economic Zones (SEZs) for various monthly/quarterly compliance due to COVID-19 outbreak?

Development Commissioners of SEZs have been directed by Department of Commerce not to impose any punitive action in below cases where compliance is not met by for the Developers / Co‐Developer / Units located in special economic zone within prescribed due date, during COVID-19 disruption till 30^th June’2020

-Filing of Quarterly Progress Report (QPR) attested by Independent Chartered Engineers by Developers/ Co‐developers within 30 days from end of the quarter

-Filing of SOFTEX by IT/ITES units within 30 days from date of invoice

-Filing of Annual Performance Reports (APR) by SEZ units within a period of 90 days following the close of financial year (i.e. ) 30^th June’2020

-Extension of Letter of Approvals (LoA) which may expire, in the cases of:

– Developers/co‐developers who are in the process of developing and Operationalizing the SEZ;

– Units which are likely to complete their 5-year block for NFE assessment;

– Units which are yet to commence operations

What if when the extension of Letter of Approvals (LOA’s) cannot be processed through electronic mode or required physical meeting between development Commissioner & the Units/ Developers/ Co- Developers in Special Economic Zone during COVID-19 lockdown?

Department of Commerce directed Development commissioner in case of LOA’s where it is not possible to grant extension through electronic mode or in cases where a physical meeting is required, Ad‐hoc interim extension / deferment of the expiry date may be granted without prejudice till 30^th June’2020 or further instructions of the Department on the matter, whichever is earlier.

What is the procedure to obtain online clearance from customs authorities for moving laptops from the units located at Software Technology Park of India by IT & ITes & units in SEZ?

The directorate general of export promotion informed on the clarification sought for restriction on moving of Laptops outside STPI /SEZ units for allowing work from home for critical resources, in view of present COVID-19 crisis the endorsement for online clearance can be done electronically over email and acknowledgement can also be provided over email without the need for a physical visit to the Customs office.

What is the due date for claiming 100% deductions on profits and gains derived from the export by Units located at Special Economic Zone under section 10AA of Income Tax Act, 1961 which requires necessary approval on or before 31^st March 2020?

The date for commencement of operation for the SEZ units for claiming deduction under deduction 10AA of the IT Act has also extended to 30^th June’2020 for the units which received necessary approval by 31^st March’2020.

Source: No. FEMA 23(R)/ (3)/2020-RB dt.31.03.2020

Act: Foreign Exchange Management Act, 1999

Is there any extension provided to exporters on the time period for realization and repatriation of export proceeds for exports made during COVID-19 disruptions, as many of the countries are practising lockdown as like India or operating with skeletal staff?

Yes, the amount representing the full export value of goods/software/services exported up to 31^st July’2020 shall be realised and repatriated to India within 15 months from the date of export instead of 9 months as per Regulation 9(1) of Foreign Exchange Management (Export of Goods and Services) Regulations, 2015.

Is there any extension provided to exporters on the time period for realization and repatriation of export proceeds for goods exported to Warehouse outside India during COVID-19 disruptions, as many of the countries are practising lockdown as like India or operating with skeletal staff?

Yes, the goods exported up to 31^st July’2020 to a warehouse established outside India with the permission of the Reserve Bank, the amount representing the full export value of goods exported, shall be paid to the authorised dealer as soon as it is realised and in any case within 15 months as per Regulation 9(1)(a) of Foreign Exchange Management (Export of Goods and Services) Regulations, 2015.

Is there any extension provided to exporters on the time period for realisation and repatriation of Export Proceeds by STPIs/ETPIs/BTPs/SEZ for exports made during COVID-19 disruptions, as many of the countries are practicing lockdown as like India or operating with skeletal staff?

Yes, the amount representing the full export value of goods/software/services by STPIs/ETPIs/BTPs/SEZ exported up to 31^st July’2020 shall be realised and repatriated to India within 15 months from the date of export instead of 9 months as per Regulation 9(2)(a) of Foreign Exchange Management (Export of Goods and Services) Regulations, 2015.

Source: No. K-43014(16)/5/2020- SEZ dt.11.05.2020

Is there any Interim Relief allowed to SEZ units on its monthly Rental payment to SEZ developers during the COVID-19 Lockdown?

Yes, Ministry of Commerce & Industry announced Interim Relief to SEZ units on account of the Covid19 lockdown, the payment of lease rent for Q1’2020 ( (i.e.)Apr’20-May’20)) is deferred up to 31^st July’2020 for all SEZ Units, without any interest on the delayed interest payments

Any other additional relief provided on the lease rental for the SEZ Units?

Yes, Ministry of Commerce & Industry announced that there will not be any increase in the lease rental for the FY 2020-21 for all SEZ units, as an additional relief due to COVID-19 outbreak.

Thenmozhi Krishnakumar

Manager-Finance

Aparajitha Corporate Services Private Limited

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