#THE SPECIAL ECONOMIC ZONES ACT, 2005 
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##ARRANGEMENT OF SECTIONS 
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##CHAPTER I 

###PRELIMINARY 

###SECTIONS 

1.  Short title, extent and commencement. 
2.  Definitions. 

##CHAPTER II 

###ESTABLISHMENT OF SPECIAL ECONOMIC ZONE 

3.  Procedure for making proposal to establish Special Economic Zone. 
4.  Establishment of Special Economic Zone and approval and authorisation to operate it to, 
Developer. 
5.  Guidelines for notifying Special Economic Zone. 
6.  Processing and non-processing areas. 
7.  Exemption from taxes, duties or cess. 

##CHAPTER III 

###CONSTITUTION OF BOARD OF APPROVAL 

8.  Constitution of Board of Approval. 
9.  Duties, Powers and functions of Board. 
10.  Suspension of letter of approval and transfer of Special Economic Zone in certain cases. 

##CHAPTER IV 

###DEVELOPMENT COMMISSIONER 

11.  Development Commissioner. 
12.  Functions of Development Commissioner. 

##CHAPTER V 

###SINGLE WINDOW CLEARANCE 

13.  Constitution of Approval Committee. 
14.  Powers and functions of Approval Committee. 
15.  Setting up of Unit. 
16.  Cancellation of letter of approval to entrepreneur. 
17.  Setting up and operation of Offshore Banking Unit. 
18.  Setting up of International Financial Services Centre. 
19.  Single application form, return, etc. 
20.  Agency to inspect. 
21.  Single enforcement officer or agency for notified offences. 
22.  Investigation, inspection, search or seizure. 
23.  Designated Courts to try suits and notified offences. 
24.  Appeal to High Court. 
25.  Offences by companies. 

##CHAPTE VI 

###SPECIAL FISCAL PROVISIONS FOR SPECIAL ECONOMIC ZONES 

26.  Exemptions, drawbacks and concessions to every Developer and entrepreneur. 
27.  Provisions of Income-tax Act, 1961 to apply with certain modification in relation to Developers 
and entrepreneurs. 
28.  Duration of goods or services in Special Economic Zones. 
29.  Transfer of ownership and removal of goods. 
30.  Domestic clearance by Units. 

##CHAPTER VII 

###SPECIAL ECONOMIC ZONE AUTHORITY 

31.  Constitution of Authority. 
32.  Officers of Authority and other staff. 
33.  Special provision for transfer of officers or other employees to Authority. 
34.  Functions of Authority. 
35.  Grants and loans by Central Government. 
36.  Constitution of Fund and its application. 
37.  Accounts and audit. 
38.  Directions by Central Government. 
39.  Returns and reports. 
40.  Power to supersede Authority. 
41.  Members, officers and other employees of Authority to be public servants. 

##CHAPTER VIII 

###MISCELLANEOUS 

42.  Reference of dispute. 
43.  Limitation. 
44.  Applicability of provisions of this Act to existing Special Economic Zones. 
45.  Person to whom a communication may be sent under this Act. 
46.  Identity Card. 
47.  Authorities responsible for administration. 
48.  Protection of action taken in good faith. 
49.  Power to modify provisions of this Act or other enactments in relation to Special Economic 
Zones.
50.  Power of State Government to grant exemption. 
51.  Act to have overriding effect. 
52.  Certain provisions not to apply. 
53.  Special Economic Zones to be ports, airports, inland container depots, land stations, etc., in 
certain cases.
54.  Amendment to First Schedule. 
55.  Power to make rules. 
56.  Power to remove difficulties. 
57.  Amendment of certain enactments. 
58.  Savings. 
THE FIRST SCHEDULE. 
THE SECOND SCHEDULE. 
THE THIRD SCHEDULE. 



##THE SPECIAL ECONOMIC ZONES ACT, 2005 

###ACT NO. 28 OF 2005 

[23rd June, 2005.]

An Act to provide for the establishment, development and management of the Special Economic 
Zones for the promotion of exports and for matters connected therewith or incidental thereto. 

BE it enacted by Parliament in the Fifty-sixth Year of the Republic of India as follows:— 

##CHAPTER I 

###PRELIMINARY 

1. **Short title, extent and commencement.**—(1) This Act may be called the Special Economic Zones 
Act, 2005. 

(2) It extends to the whole of India. 

(3) It  shall  come  into  force  on  such  date1  as  the  Central  Government  may,  by  notification  in  the 
Official  Gazette, appoint, and  different  dates  may  be  appointed  for  different  provisions of this  Act and 
any reference in any such provision to the commencement of this Act shall be construed as a reference to 
the coming into force of that provision. 

2. **Definitions.**—In this Act, unless the context otherwise requires,— 

(a)  “appointed  day”  with  reference  to  a  Special  Economic  Zone  means  the  date  on  which  the 
Special Economic Zone is notified by the Central Government under sub-section (1) of section 4; 

(b)  “Approval  Committee”  means  an  Approval  Committee  constituted  under  sub-section  (1)  of 
section 13; 

(c) “authorised operations” means operations which may be authorised under sub-section (2) of 
section 4 and sub-section (9) of section 15; 

(d) “Authority” means a Special Economic Zone Authority constituted under sub-section (1) of 
section 31; 

(e) “Board” means the Board of Approval constituted under sub-section (1) of section 8; 

(f) “Co-Developer” means a person who, or a State Government which, has been granted by the 
Central Government a letter of approval under sub-section (12) of section 3; 

(g)  “Developer”  means  a  person  who,  or  a  State  Government  which,  has  been  granted  by  the 
Central Government a letter of approval under sub-section (10) of section 3 and includes an Authority 
and a Co-Developer; 

(h)  “Development  Commissioner”  means  the  Development  Commissioner  appointed  for  one  or 
more Special Economic Zones under sub-section (1) of section 11; 

(i)  “Domestic  Tariff  Area”  means  the  whole  of  India  (including  the  territorial  waters  and 
continental shelf) but does not include the areas of the Special Economic Zones; 

(j) “entrepreneur” means a person who has been granted a letter of approval by the Development 
Commissioner under sub-section (9) of section 15; 

(k) “existing Special Economic Zone” means every Special Economic Zone which is in existence 
on or before the commencement of this Act; 

(l) “existing Unit” means every Unit which has been set up on or before the commencement of 
this Act in an existing Special Economic Zone; 

(m) “export” means— 

  (i) taking goods, or providing services, out of India, from a Special Economic Zone, by land, 
sea or air or by any other mode, whether physical or otherwise; or 

  (ii) supplying  goods,  or  providing  services,  from  the  Domestic  Tariff  Area  to  a  Unit  or 
Developer; or 

  (iii) supplying goods, or providing services, from one Unit to another Unit or Developer, in 
the same or different Special Economic Zone; 

(n) “Free Trade and Warehousing Zone” means a Special Economic Zone wherein mainly trading 
and warehousing and other activities related thereto are carried on; 

(o) “import” means— 

  (i) bringing goods or receiving services, in a Special Economic Zone, by a Unit or Developer 
from  a  place  outside  India  by  land,  sea  or  air  or  by  any  other  mode,  whether  physical  or 
otherwise; or 

  (ii) receiving goods, or services by a Unit or Developer from another Unit or Developer of the 
same Special Economic Zone or a different Special Economic Zone; 

(p) “infrastructure  facilities”  means  industrial,  commercial  or  social  infrastructure  or  other 
facilities  necessary  for  the  development  of  a  Special  Economic  Zone  or  such  other facilities  which 
may be prescribed; 

(q)  “International  Financial  Services  Centre”  means  an  International  Financial  Services  Centre 
which has been approved by the Central Government under sub-section (1) of section 18; 

(r) “manufacture” means to make, produce, fabricate, assemble, process or bring into existence, 
by hand or by machine, a new product having a distinctive name, character or use and shall include 
processes  such  as  refrigeration,  cutting,  polishing,  blending,  repair,  remaking,  re-engineering  and 
includes  agriculture,  aquaculture,  animal  husbandry,  floriculture,  horticulture,  pisciculture,  poultry, 
sericulture, viticulture and mining; 

(s) “notification”  means  a  notification  published  in  the  Official  Gazette  and  the  expression 
“notify” shall be construed accordingly; 

(t) “notified offences” means the offences specified as such under sub-section (1) of section 21; 

(u) “Offshore Banking Unit” means a branch of a bank located in a Special Economic Zone and 
which has obtained the permission under clause (a) of sub-section (1) of section 23 of the Banking 
Regulation Act, 1949 (10 of 1949); 

(v) “person” includes an individual, whether resident in India or outside India, a Hindu undivided 
family,  co-operative  society,  a  company,  whether  incorporated  in  India  or  outside  India,  a  firm, 
proprietary concern, or an association of persons or body of individuals, whether incorporated or not, 
local authority  1[trust or any entity as may be notified by the Central Government] and any agency, 
office  or  branch  owned  or  controlled  by  such  individual,  Hindu  undivided  family,  co-operative, 
association, body, 2[authority, company, trust or entity]; 

(w) “prescribed” means prescribed by rules made by the Central Government under this Act; 

(x) “Reserve Bank” means the Reserve Bank of India constituted under section 3 of the Reserve 
Bank of India Act, 1934 (2 of 1934); 

(y) “Schedule” means Schedules to this Act; 
                                                           
(z) “services” means such tradable services which,— 

  (i) are  covered  under  the  General  Agreement  on  Trade  in  Services  annexed  as  IB  to  the 
Agreement establishing the World Trade Organisation concluded at Marrakesh on the 15th day of 
April, 1994; 

  (ii) may be prescribed by the Central Government for the purposes of this Act; and 

  (iii) earn foreign exchange; 

(za) “Special Economic Zone” means each Special Economic Zone notified under the proviso to 
sub-section (4) of section 3 and sub-section (1) of section 4 (including Free Trade and Warehousing 
Zone) and includes an existing Special Economic Zone; 

(zb)  “State  Government”  means  a  State  Government  of  the  State  in  which  a  Special  Economic 
Zone is established or proposed to be established; 

(zc) “Unit” means a Unit set up by an entrepreneur in a Special Economic Zone and includes an 
existing  Unit,  an  Offshore  Banking  Unit  and  a  Unit  in  an  International  Financial  Services  Centre, 
whether established before or established after the commencement of this Act; 

(zd) all other words and expressions used and not defined in this Act but defined in the Central 
Excise Act, 1944 (1 of 1944), the Industries (Development and Regulation) Act, 1951 (65 of 1951), 
the Income-tax Act, 1961 (43 of 1961), the Customs Act, 1962 (52 of 1962) and the Foreign Trade 
(Development and Regulation) Act, 1992 (22 of 1992) shall have the meanings respectively assigned 
to them in those Acts. 

##CHAPTER II 

###ESTABLISHMENT OF SPECIAL ECONOMIC ZONE 

3. **Procedure for making proposal to establish Special Economic Zone.**—(1) A Special Economic 
Zone  may  be  established  under  this  Act,  either  jointly  or  severally  by  the  Central  Government,  State 
Government, or any person for manufacture of goods or rendering services or for both or as a Free Trade 
and Warehousing Zone.

(2) Any person, who intends to set up a Special Economic Zone, may, after identifying the area, make 
a proposal to the State Government concerned for the purpose of setting up the Special Economic Zone. 

(3)  Notwithstanding  anything  contained  in  sub-section  (2),  any  person,  who  intends  to  set  up  a 
Special  Economic  Zone,  may,  after  identifying  the  area,  at  his  option,  make  a  proposal  directly  to  the 
Board for the purpose of setting up the Special Economic Zone: 

Provided that where such a proposal has been received directly from a person under this sub-section, 
the Board may  grant approval and after receipt of such approval, the person concerned shall obtain the 
concurrence of the State Government within the period, as may be prescribed. 

(4) In case a State Government intends to set up a Special Economic Zone, it may after identifying the 
area, forward the proposal directly to the Board for the purpose of setting up the Special Economic Zone: 

  Provided that the Central Government may,— 

    (a) after consulting the State Government concerned; 

    (b) without referring the proposal for setting up the Special Economic Zone to the Board; and 

    (c) after identifying the area, 

*suo motu* set up and notify the Special Economic Zone. 

(5) Every proposal under sub-sections (2) to (4) shall be made in such form, and, manner, containing 
such particulars as may be prescribed. 

(6) The State Government may, on receipt of the proposal made under sub-section (2), forward the 
same together with its recommendations to the Board within such period as may be prescribed.

(7) Without prejudice to the provisions contained in sub-section (8), the Board may, after receipt of 
the proposal under sub-sections (2) to (4), approve the proposal subject to such terms and conditions as it 
may deem fit to impose, or modify or reject the proposal. 

(8) The Central Government may prescribe the following requirements for establishment of a Special 
Economic Zone, namely:— 

  (a) the  minimum  area  of  land  and  other  terms  and  conditions  subject  to  which  the  Board  shall 
approve, modify or reject any proposal received by it under sub-sections (2) to (4); and 

  (b) the  terms  and  conditions,  subject  to  which  the  Developer  shall  undertake  the  authorised 
operations and his obligations and entitlements: 

Provided that different minimum area of land and other terms and conditions referred to in clause (a) 
may be prescribed by the Central Government for a class or classes of Special Economic Zones. 

(9) If the Board,— 

  (a) approves without any modification the proposal received under sub-sections (2) to (4), it shall 
communicate the same to the Central Government; 

  (b) approves  with  modifications  the  proposal  received  under  sub-sections  (2)  to  (4),  it  shall, 
communicate  such  modifications  to  the  person  or  the  State  Government  concerned  and  if  such 
modifications have been accepted by such person or State Government, the Board shall communicate 
the approval to the Central Government; 

  (c) rejects the proposal received under sub-sections (2) to (4), it shall record the reasons therefor 
and  communicate  the  rejection  to  the  Central  Government  which  shall  intimate  to  the  State 
Government or the person concerned. 

(10) The  Central  Government  shall,  on  receipt  of  communication  under  clause  (a)  or  clause  (b)  of 
sub-section  (9),  grant,  within  such  time  as  may  be  prescribed,  a  letter  of  approval  on  such  terms  and 
conditions and obligations and entitlements as may be approved by the Board, to the Developer, being the 
person or the State Government concerned: 

  Provided that the Central Government may, on the basis of approval of the Board, approve more than 
one Developer in a Special Economic Zone in cases where one Developer does not have in his possession 
the minimum area of contiguous land, as may be prescribed, for setting up a Special Economic Zone and 
in such cases, each Developer shall be considered as a Developer in respect of the land in his possession. 

(11) Any person who, or a State Government which, intends to provide any infrastructure facilities in 
the identified area referred to in sub-sections (2) to (4), or undertake any authorised operation may, after 
entering  into  an  agreement  with  the  Developer referred  to  in  sub-section (10), make  a  proposal for the 
same to the Board for its approval and the provisions of sub-section (5) and sub-sections (7) to (10) shall, 
as far as may be, apply to the said proposal made by such person or the State Government. 

(12) Every person or the State Government referred to in sub-section (11), whose proposal has been 
approved  by  the  Board  and  who,  or  which,  has  been  granted  letter  of  approval  by  the  Central 
Government, shall be considered as a Co-Developer of the Special Economic Zone. 

(13)  Subject  to  the  provisions  of  this  section and the  letter of approval  granted  to a  Developer,  the 
Developer may allocate space or built up area or provide infrastructure services to the approved Units in 
accordance with the agreement entered into by him with the entrepreneurs of such Units. 

4. **Establishment of Special Economic Zone and approval and authorisation to operate it to, 
Developer.**—(1)  The  Developer  shall,  after  the  grant  of  letter  of  approval  under  sub-section  (10)  of 
section 3, submit the exact particulars of the identified area referred to in sub-sections (2) to (4) of that 
section,  to  the  Central  Government  and  thereupon  that  Government  may,  after  satisfying  that  the 
requirements,  under  sub-section  (8)  of  section  3  and  other  requirements,  as  may  be  prescribed,  are 
fulfilled, notify the specifically identified area in the State as a Special Economic Zone: 

  Provided  that  an  existing  Special  Economic  Zone  shall  be  deemed  to  have  been  notified  and 
established  in accordance with the  provisions  of  this  Act  and the provisions of  this  Act shall, as  far as 
may be, apply to such Zone accordingly: 

  Provided further that the Central Government may, after notifying the Special Economic Zone, if it 
considers  appropriate,  notify  subsequently  any  additional  area  to  be  included  as  a  part  of  that  Special 
Economic Zone.

(2) After  the  appointed  day,  the  Board  may,  authorise  the  Developer  to  undertake  in  a  Special 
Economic Zone, such operations which the Central Government may authorise. 

5. **Guidelines for notifying Special Economic Zone.**—The  Central  Government,  while  notifying 
any area as a Special Economic Zone or an additional area to be included in the Special Economic Zone 
and discharging its functions under this Act, shall be guided by the following, namely:— 

  (a) generation of additional economic activity; 

  (b) promotion of exports of goods and services; 

  (c) promotion of investment from domestic and foreign sources; 

  (d) creation of employment opportunities; 

  (e) development of infrastructure facilities; and 

  (f) maintenance of sovereignty and integrity of India, the security of the State and friendly 
relations with foreign States. 

6. **Processing and non-processing areas.**—The  areas  falling  within  the  Special  Economic  Zones 
may be demarcated by the Central Government or any authority specified by it as— 

  (a) the processing area for setting up Units for activities, being the manufacture of goods, or 
rendering services; or 

  (b) the area exclusively for trading or warehousing purposes; or 

  (c) the non-processing areas for activities other than those specified under clause (a) or clause (b).

7. **Exemption from taxes, duties or cess.**—Any goods or services exported out of, or imported into, 
or procured from the Domestic Tariff Area by,— 

  (i) a Unit in a Special Economic Zone; or 

  (ii) a Developer, 

shall,  subject  to  such  terms,  conditions  and  limitations,  as  may  be  prescribed,  be  exempt  from  the 
payment of taxes, duties or cess under all enactments specified in the First Schedule. 

##CHAPTER III 

###CONSTITUTION OF BOARD OF APPROVAL 

8. **Constitution of Board of Approval.**—(1) The Central Government shall, within fifteen days of 
the  commencement  of  this  Act,  by  notification,  constitute,  for  the  purposes  of  this  Act,  a  Board  to  be 
called the Board of Approval.

(2) The Board shall consist of— 

  (a) an  officer  not below  the  rank  of  an  Additional  Secretary  to  the  Government  of  India in the 
Ministry or Department of the Central Government dealing with commerce—Chairperson, ex officio; 

  (b) two  officers,  not  below  the  rank  of  a  Joint  Secretary  to  the  Government  of  India,  to  be 
nominated  by  the  Central  Government  to  represent  the  Ministry  or  Department  of  the  Central 
Government dealing with revenue—Members, *ex officio*; 

  (c) one officer not below the rank of a Joint Secretary to the Government of India to be nominated 
by  the  Central  Government  to  represent  the  Ministry  or  Department  of  the  Central  Government 
dealing with economic affairs (financial services) —Member, *ex officio*; 

  (d) such number of officers, not exceeding ten, not below the rank of the Joint Secretary to the 
Government  of  India,  to  be  nominated  by  the  Central  Government  to  represent  the  Ministries  or 
Departments  of  the  Central  Government  dealing  with  commerce,  industrial  policy  and  promotion, 
science  and  technology,  small  scale  industries  and  agro  and  rural  industries,  home  affairs,  defence, 
environment and forests, law, overseas Indian affairs and urban development—Members, *ex officio*;

  (e) a nominee of the State Government concerned—Member, *ex officio*; 

  (f) the Director General of Foreign Trade or his nominee—Member, *ex officio*;

  (g) the Development Commissioner concerned—Member, *ex officio*; 

  (h) a Professor in the Indian Institute of Management, being a society registered under the 
Societies Registration Act, 1860 (21 of 1860) or the Indian Institute of Foreign Trade, being a society 
registered  under  the  Societies  Registration  Act,  1860,  as  may  be,  nominated  by  the  Central 
Government—Member, *ex officio*; 

  (i) an officer not below the rank of Deputy Secretary to the Government of India dealing with the 
Special  Economic  Zones  in  the  Ministry  or  Department  of  the  Central  Government,  dealing  with 
commerce to be nominated by the Central Government—Member-Secretary, *ex officio*:

Provided  that  the  member,  being  the  Joint  Secretary,  nominated  under  clauses  (b)  to  (d)  of  this  
sub-section may, if he is unable to attend the meeting of the Board, authorise any other officer to attend 
the meeting of the Board on his behalf. 

(3) The term of office of an *ex officio* Member shall come to an end as soon as he ceases to hold the 
office by virtue of which he was so nominated. 

(4) For the purposes of performing its functions, the Board may co-opt as members, such number of 
persons as it deems fit, who have special knowledge of, and practical experience in, matters relating to, or 
relevant to activity connected with the Special Economic Zones and any such person shall have the right 
to take part in the discussions of the Board but shall not be counted for the quorum and shall not be a 
member for any other purpose and such person shall be entitled to receive such allowances or fees, as the 
case may be, fixed by the Board. 

(5) The Board shall meet at such times and places as may be appointed by it and shall have the power 
to regulate its own procedure. 

(6) One-third of the total Members of the Board shall form a quorum, and all the acts of the Board 
shall be decided by a general consensus of the Members present. 

(7) No act or proceeding of the Board shall be called in question on the ground merely of existence of 
any vacancy in, or any defect in the constitution of, the Board. 

(8) All orders and decisions of the Board and all other instruments issued by it shall be authenticated 
by the signature of the Member-Secretary, or any other Member as may be authorised by the Board in this 
behalf. 

9. **Duties, powers and functions of Board.**—(1)  Subject  to  the  provisions  of  this  Act,  the  Board 
shall have the duty to promote and ensure orderly development of the Special Economic Zones. 

(2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers and 
functions of the Board shall include— 

  (a) granting of approval or rejecting proposal or modifying such proposals for establishment of 
the Special Economic Zones; 

  (b) granting approval of authorised operations to be carried out in the Special Economic Zones by 
the Developer; 

  (c) granting of approval to the Developers or Units (other than the Developers or the Units which 
are  exempt  from  obtaining  approval  under  any  law  or  by  the  Central  Government)  for  foreign 
collaborations  and  foreign  direct  investments  (including  investments  by  a  person  resident  outside 
India), in the Special Economic Zone for its development, operation and maintenance; 

  (d) granting of approval or rejecting of proposal for providing infrastructure facilities in a Special 
Economic Zone or modifying such proposals; 

  (e) granting, notwithstanding anything contained in the Industries (Development and Regulation) 
Act, 1951 (65 of 1951), a licence to an industrial undertaking referred to in clause (d) of section 3 of 
that Act, if such undertaking is established, as a whole or part thereof, or proposed to be established, 
in a Special Economic Zone; 

  (f) suspension  of  the  letter  of  approval  granted  to  a  Developer  and  appointment  of  an 
Administrator under sub-section (1) of section 10; 

  (g) disposing of appeals preferred under sub-section (4) of section 15; 

  (h) disposing of appeals preferred under sub-section (4) of section 16; 

  (i) performing such other functions as may be assigned to it by the Central Government. 

(3) The Board may, if so required for the purposes of this Act or any other law for the time being in 
force  relating  to  Special  Economic  Zones,  by  notification,  decide  as  to  whether  a  particular  activity 
constitutes  manufacture  as  defined  in  clause  (r)  of  section  2  and  such  decision  of  the  Board  shall  be 
binding on all Ministries and Departments of the Central Government. 

(4) The  Board  may  delegate  such  powers  and  functions  as  it  may  deem  fit  to  one  or  more 
Development Commissioners for effective and proper discharge of the functions of the Board. 

(5) Without  prejudice  to  the  foregoing  provisions  of  this  Act,  the  Board  shall,  in  exercise  of  its 
powers or the performance of its functions under this Act, be bound by such directions on questions of 
policy as the Central Government may give in writing to it from time to time. 

(6) The decision of the Central Government whether a question is one of policy or not shall be final. 

10. **Suspension of letter of approval and transfer of Special Economic Zone in certain cases.**—

(1) If, at any time, the Board is of the opinion that a Developer— 

(a) is  unable  to  discharge  the  functions  or  perform  the  duties  imposed  on  him  by  or  under  the 
provisions of this Act or rules made thereunder; or 

(b) has persistently defaulted in complying with any direction given by the Board under this Act; 

or 

(c) has violated the terms and conditions of the letter of approval; or 

(d) whose financial position is such that he is unable to fully and efficiently discharge the duties 
and obligations imposed on him by the letter of approval, and

the  circumstances  exist  which  render  it  necessary  for  it  in  public  interest  so  to  do,  the  Board  may,  on 
application,  or  with  the  consent  of  the  Developer,  or  otherwise,  for  reasons  to  be  recorded  in  writing, 
suspend  the  letter  of  approval,  granted  to  the  Developer  for  a  whole  or  part  of  his  area  established  as 
Special Economic Zone, for a period not exceeding one year and appoint an Administrator to discharge 
the functions of the Developer in accordance with the terms and conditions of the letter of approval and 
manage the Special Economic Zone accordingly. 

(2) Consequent upon appointment of an Administrator, the management of the Special Economic 
Zone of the Developer referred to in sub-section (1) shall vest in the Administrator. 

(3) No letter of approval shall be suspended under sub-section (1) unless the Board has given to the 
Developer  not  less  than  three  months'  notice,  in  writing,  stating  the  grounds  on  which  it  proposes  to 
suspend the letter of approval, and has considered any cause shown by the Developer within the period of 
that notice, against the proposed suspension. 

(4) The  Board  may,  instead  of  suspending  the  letter of  approval  under  sub-section  (1),  permit  it  to 
remain  in  force  subject  to  such  further  terms  and  conditions  as  it  thinks  fit  to  impose,  and  any  further 
terms or conditions so imposed shall be binding upon and be complied with by the Developer and shall be 
of like force and effect as if they were contained in the letter of approval. 

(5) In case the Board suspends a letter of approval under this section, it shall serve a notice of 
suspension upon the Developer and fix a date on which the suspension shall take effect. 

(6) Upon suspension of the letter of approval under sub-section (1), the Special Economic Zone of the 
Developer referred to in sub-section (5) shall vest in the Administrator under sub-section (2) for a period 
not exceeding one year or up to the date on which the letter of approval for such Special Economic Zone 
is transferred,  whichever  is  earlier, in accordance  with  the  provisions  contained  in  sub-sections (7)  and 
(9), as the case may be.

(7) Where the Board has given notice for suspension of letter of approval under sub-section (5), the 
Developer  may,  after  prior  approval  of  the  Board,  transfer  his  letter  of  approval  to  any  person  who  is 
found eligible by the Board for grant of such approval. 

(8) If at any time, it appears to the Board that the purpose of the order appointing the Administrator 
has been fulfilled or that for any reason it is undesirable that the order of appointment should remain in 
force,  the  Board  may  cancel  the  order  and  thereupon  the  Administrator  shall  be  divested  of  the 
management  of  the  Special  Economic  Zone  which  shall,  unless  otherwise  directed  by  the  Board, again 
vest  in  the  person,  being  the  Developer,  in  whom  it  was  vested  immediately  prior  to  the  date  of 
appointment of the Administrator. 

(9) Where the Board suspends the letter of approval, under this section, in respect of any Developer, 
the following provisions shall apply, namely:— 

  (a) the  Board  shall  invite  applications  for  transferring  the  letter  of  approval  of  the  Developer, 
whose  approval  has  been  suspended  and  select  the  person  or  persons,  in  accordance  with  the 
procedure  as  may  be  prescribed,  to  whom  the  letter  of  approval  of  the  Developer  in  the  Special 
Economic Zone may be transferred; 

  (b) upon selection of person or persons under sub-clause (a), the Board may, by notice in writing, 
require the Developer to transfer his letter of approval in a Special Economic Zone to the person or 
persons so selected and thereupon the Developer shall transfer his interests, rights and liabilities in the 
Special Economic Zone to any of the persons (hereafter in this section referred to as the “transferee”) 
who has been selected by the Board on such terms and conditions and consideration as may be agreed 
upon between the Developer and the transferee; 

  (c) all  the  rights,  duties,  obligations  and  liabilities  of  the  Developer,  on  and  from  the  date  of 
suspension of letter of approval or on and from the date, if earlier, on which his letter of approval in 
the  Special  Economic  Zone  of  the  Developer  has  been  transferred  to  the  transferee,  shall  cease 
absolutely except for any liabilities which have accrued prior to that date; 

  (d) the  Board  may  make  such  interim  arrangements  in  regard  to  the  operation  of  the  Special 
Economic Zone as may be considered appropriate; 

  (e) the Administrator shall exercise such powers and discharge such functions as the Board may 
direct. 

(10) The  Board  may,  in  order  to  promote  export  or  to  protect  the  interest  of  Units  or in  the  public 
interest, issue such directions or formulate such scheme as it may consider necessary for operation of the 
Special Economic Zone. 

##CHAPTER IV 

###DEVELOPMENT COMMISSIONER 

11. **Development Commissioner.**—(1) The Central Government may appoint any of its officers not 
below the rank of Deputy Secretary to the Government of India as the Development Commissioner of one 
or more Special Economic Zones.

(2) The Central Government may appoint such officers and other employees as it considers necessary 
to  assist  the  Development  Commissioner  in  the  performance  of  his  functions  in  the  Special  Economic 
Zones established by a Developer (other than the Central Government) under this Act on such terms and 
conditions as it deems fit.

(3) Every Development Commissioner, officer and other employee shall be entitled to such salary and 
allowances  and  subject  to  such  terms  and  conditions  of  service  in  respect  of  leave,  pension,  provident 
fund and other matters as may, from time to time, be specified by the Central Government. 

12. **Functions of Development Commissioner.**—(1)  Every  Development  Commissioner  shall take 
all steps in order to discharge his functions under this Act to ensure speedy development of the Special 
Economic Zone and promotion of exports therefrom.

(2) Without prejudice to the generality of the foregoing provisions, the Development Commissioner 
shall— 

  (a) guide the entrepreneurs for setting up of Units in the Special Economic Zone; 

  (b) ensure and take suitable steps for effective promotion of exports from the Special Economic 
Zone; 

  (c) ensure proper co-ordination with the Central Government or State Government Departments 
concerned or agencies with respect to, or for the purposes, of clauses (a) and (b); 

  (d) monitor the performance of the Developer and the Units in a Special Economic Zone; 

  (e) discharge such other functions as may be assigned to him by the Central Government under 
this Act or any other law for the time being in force; and 

  (f) discharge such other functions as may be delegated to him by the Board. 

(3) Every Development Commissioner shall be overall in-charge of the Special Economic Zone and 
shall  exercise  administrative  control  and  supervision  over  the  officers  and  employees  appointed  under 
sub-section (2) of section 11 (including the officials deputed to such Special Economic Zone) to discharge 
any of the functions under this Act. 

(4) Without prejudice to the provisions of sub-sections (1) to (3), every Development Commissioner 
shall  discharge  such  functions  and  exercise  such  powers  as  may  be  delegated  to  him  by  a  general  or 
special order by the Central Government or the State Government concerned, as the case may be. 

(5) Every Development Commissioner may call for such information from a Developer or Unit from 
time to time as may be necessary to monitor the performance of the Developer or the Unit, as the case 
may be. 

(6) The Development Commissioner may delegate any or all of his powers or functions to any of the 
officers employed under him. 

##CHAPTER V 

###SINGLE WINDOW CLEARANCE 

13. **Constitution of Approval Committee.**—(1) The Central Government shall,— 

  (a) in the case of existing Special Economic Zones, within six months from the date of 
commencement of this Act; 

  (b) in  case  of  other  Special  Economic  Zones  established  after  the  commencement  of  this  Act, 
within six months from the date of establishment of such Special Economic Zone,

by  notification,  constitute  a  Committee  for  every  Special  Economic  Zone,  to  be  called  the  Approval 
Committee to exercise the powers and perform the functions specified in section 14. 

(2) Every Approval Committee shall consist of— 

  (a) the Development Commissioner—Chairperson, *ex officio*; 

  (b) two  officers  of  the  Central  Government  to  be  nominated  by  that  Government—Members,
*ex officio*; 

  (c) two officers of the Central Government to be nominated by that Government to represent the 
Ministry or Department dealing with revenue—Members, *ex officio*;

  (d) one officer of the Central Government to be nominated by that Government to represent the 
Ministry or Department dealing with economic affairs (financial services)—Member, *ex officio*; 

  (e) two officers of the State Government concerned to be nominated by that State Government—
Members, *ex officio*;

  (f) a representative of the Developer concerned—Special invitee.

(3) For the purpose of exercising its powers and performing its functions, the Approval Committee 
may invite to its meetings, such persons as the Committee deems fit, whose assistance or advice it may 
consider necessary. 

(4) Every Approval Committee shall meet at such times and places as it considers necessary and shall 
have the power to regulate its own procedure. 

(5) One-half of the total Members of the Approval Committee shall form a quorum, and all the acts of 
the Approval Committee shall be decided by a general consensus of the Members present: 

Provided that in case the Approval Committee is unable to decide any matter by a general consensus, 
such matter shall stand referred to the Board of Approval for its decision. 

(6) No act of the Approval Committee shall be called in question on the ground merely of existence 
of any vacancy in, or any defect in the constitution of, the Approval Committee. 

(7) All orders  and decisions  of the  Approval  Committee and all  other  communications  issued  by  it 
shall be authenticated by the signature of the Chairperson or any other member as may be authorised by 
the Approval Committee in this behalf. 

(8) The  term  of  office  of  an *ex officio* Member  shall  come  to  an  end  as  soon  as  he  ceases  to  hold 
office by virtue of which he was so nominated. 

14. **Powers and functions of Approval Committee.**—(1) Every Approval Committee may discharge 
the functions and exercise the powers in respect of the following matters, namely:— 

  (a) approve  the  import  or procurement  of  goods  from  the  Domestic Tariff  Area,  in  the  Special 
Economic Zone for carrying on the authorised operations by a Developer; 

  (b)  approve  the  providing  of  services  by  a  service  provider,  from  outside  India,  or  from  the 
Domestic  Tariff  Area,  for  carrying  on  the  authorised  operations  by  the  Developer,  in  the  Special 
Economic Zone; 

  (c) monitor the utilisation of goods or services or warehousing or trading in the Special Economic 
Zone; 

  (d) approve, modify or reject proposals for setting up Units for manufacturing or rendering 
services  or  warehousing  or  trading  in  the  Special  Economic  Zone  [other  than  the  grant  of  licence 
under clause (e) of sub-section (2) of section 9] in accordance with the provisions of sub-section (8) 
of section 15: 

Provided  that  where  the  Approval  Committee  is  unable  to  decide  whether  a  particular  process 
constitutes manufacture or not it shall refer the same to the Board of Approval for decision; 

  (e) allow,  on  receipt  of  approval  under  clause  (c)  of  sub-section  (2)  of  section  9,  foreign 
collaborations  and  foreign  direct  investments  (including  investments  by  a  person  outside  India)  for 
setting up a Unit; 

  (f) monitor and supervise compliance  of  conditions  subject  to  which  the  letter  of  approval  or 
permission, if any, has been granted to the Developer or entrepreneur; and 

  (g) perform such other functions as may be entrusted to it by the Central Government or the State 
Government concerned, as the case may be. 

(2) The Approval Committee shall not discharge such functions and exercise such powers referred to 
in  sub-section  (1)  in  relation  to  a  Developer,  being  the  Central  Government,  as  may  be  specified,  by 
notification, by the Central Government: 

Provided  that  till  such  time,  the  Approval  Committee  is  constituted,  the  concerned  Development 
Commissioner shall discharge all functions and exercise all powers of the Approval Committee. 

15. **Setting up of Unit.**—(1) Any person, who intends to set up a Unit for carrying on the authorised 
operations in a Special Economic  Zone,  may  submit  a  proposal  to  the  Development  Commissioner 
concerned in such form and manner containing such particulars as may be prescribed: 

Provided that an existing Unit shall be deemed to have been set up in accordance with the provisions 
of this Act and such Units shall not require approval under this Act. 

(2) On receipt of the proposal under sub-section (1), the Development Commissioner shall submit the 
same to the Approval Committee for its approval. 

(3) The Approval Committee may, either approve the proposal without modification, or approve the 
proposal with modifications subject to such terms and conditions as it may deem fit to impose, or reject 
the proposal in accordance with the provisions of sub-section (8): 

Provided that in case of modification or rejection of a proposal, the Approval Committee shall afford 
a reasonable opportunity of being heard to the person concerned and after recording the reasons, either 
modify or reject the proposal. 

(4) Any person aggrieved by an order of the Approval Committee, made under sub-section (3), may 
prefer an appeal to the Board within such time as may be prescribed. 

(5) No appeal shall be admitted if it is preferred after the expiry of the time prescribed therefor: 

Provided  that  an  appeal  may  be  admitted  after  the  expiry  of  the  period  prescribed  therefor  if  the 
appellant  satisfies  the  Board  that  he  had  sufficient  cause  for  not  preferring  the  appeal  within  the 
prescribed time. 

(6) Every  appeal  made  under  sub-section  (4)  shall  be  in  such  form  and  shall  be  accompanied  by  a 
copy of the order appealed against and by such fees as may be prescribed. 

(7) The procedure for disposing of an appeal shall be such as may be prescribed: 

Provided that before disposing of an appeal, the appellant shall be given a reasonable opportunity of 
being heard. 

(8) The Central Government may prescribe,— 

  (a) the requirements (including the period for which a Unit may be set up) subject to which the 
Approval Committee shall approve, modify or reject any proposal referred to in sub-section (3); 

  (b) the terms and conditions, subject to which the Unit shall undertake the authorised operations 
and its obligations and entitlements. 

(9) The  Development  Commissioner  may,  after  approval  of  the  proposal  referred  to  in  sub-section (3), 
grant  a  letter  of  approval  to  the  person  concerned  to  set  up  a  Unit  and  undertake  such  operations 
which  the  Development  Commissioner  may  authorise  and  every  such  operation  so  authorised  shall  be 
mentioned in the letter of approval. 

16. **Cancellation of letter of approval to entrepreneur.**—(1) The Approval Committee may, at any 
time, if it has any reason or cause to believe that the entrepreneur has persistently contravened any of the 
terms and conditions or its obligations subject to which the letter of approval  was  granted  to  the 
entrepreneur, cancel the letter of approval: 

Provided that no such letter of approval shall be cancelled unless the entrepreneur has been afforded a 
reasonable opportunity of being heard. 

(2) Where the letter of approval has been cancelled under sub-section (1), the Unit shall not, from the 
date of such cancellation, be entitled to any exemption, concession, benefit or deduction available to it, 
being a Unit, under this Act.

(3) Without prejudice to the provisions of this Act, the entrepreneur whose letter of approval has been 
cancelled under sub-section (1), shall remit, the exemption, concession, drawback and any other benefit 
availed by him in respect of the capital goods, finished goods lying in stock and unutilised raw materials 
relatable to his Unit, in such manner as may be prescribed. 

(4) Any person aggrieved by an order of the Approval Committee made under sub-section (1), may 
prefer an appeal to the Board within such time as may be prescribed. 

(5) No appeal shall be admitted if it is preferred after the expiry of the time prescribed therefor: 

Provided  that  an  appeal  may  be  admitted  after  the  expiry  of  the  period  prescribed  therefor  if  the 
appellant  satisfies  the  Board  that  he  had  sufficient  cause  for  not  preferring  the  appeal  within  the 
prescribed time.

(6) Every appeal made under sub-section (4) shall be in such form and shall be accompanied by a 
copy of the order appealed against and by such fees as may be prescribed. 

(7) The procedure for disposing of an appeal shall be such as may be prescribed:

Provided that before disposing of an appeal, the appellant shall be given a reasonable opportunity of 
being heard. 

17. **Setting up and operation of Offshore Banking Unit.**—(1)  An  application  for  setting  up  and 
operation of an Offshore Banking Unit in a Special Economic Zone may be made to the Reserve Bank in 
such form and manner as may be prescribed. 

(2) On receipt of an application under sub-section (1), the Reserve Bank shall, if it is satisfied that the 
applicant fulfils all the conditions specified under sub-section (3), grant permission to such applicant for 
setting up and operation of an Offshore Banking Unit. 

(3) The Reserve Bank may, by notification, specify the terms and conditions  subject  to  which  an 
Offshore Banking Unit may be set up and operated in the Special Economic Zone. 

18. **Setting up of International Financial Services Centre.**—(1)  The  Central  Government  may 
approve  the  setting  up  of  an  International  Financial  Services  Centre  in  a  Special  Economic  Zone  and 
prescribe the requirements for setting up and operation of such Centre: 

Provided that the Central Government shall approve only one International Financial Services Centre 
in a Special Economic Zone. 

(2) The Central Government may, subject to such guidelines as may be framed by the Reserve Bank, 
the  Securities and  Exchange  Board  of  India,  the  Insurance  Regulatory  and  Development  Authority  and 
such other concerned authorities, as it deems fit, prescribe the requirements for setting up and the terms 
and conditions of the operation of Units in an International Financial Services Centre.

19. **Single application form, return, etc.**—Notwithstanding anything contained in any other law for 
the time being in force, the Central Government may, if required,— 

(a) prescribe a single application form for obtaining any licence, permission or registration or 
approval by a Developer, or an entrepreneur under one or more Central Acts; 

(b) authorise the Board, the Development Commissioner or Approval Committee, to exercise the 
powers  of  the  Central  Government  on  matters  relating  to  the  development  of  a  Special  Economic 
Zone or setting up and operation of Units; 

(c) prescribe  a  single  form  for  furnishing  returns  or  information  by  a  Developer  or  an 
entrepreneur under one or more Central Acts. 

20. **Agency to inspect.**—Notwithstanding anything contained in any other law for the time being in 
force, the Central Government may, by notification, specify any officer or agency to carry out surveys or 
inspections  for  securing  of  compliance  with  the  provisions  of  any  Central  Act  by  a  Developer  or  an 
entrepreneur,  as  the  case  may  be,  and  such  officer  or  agency  shall  submit  verification  and  compliance 
reports, in such manner and within such time as may be specified in the said notification.

21. **Single enforcement officer or agency for notified offences.**—(1) The Central Government may, 
by notification, specify any act or omission made punishable under any Central Act, as notified offence 
for the purposes of this Act. 

(2) The Central Government may, by general or special order, authorise any officer or agency to be 
the enforcement officer or agency in respect of any notified offence or offences committed in a Special 
Economic Zone. 

(3) Every officer or agency authorised under sub-section (2) shall have all the corresponding powers 
of investigation, inspection, search or seizure as is provided under the relevant Central Act in respect of 
the notified offences. 

22. **Investigation, inspection, search or seizure.**—The agency or officer, specified under section 20 
or  section  21,  may,  with  prior  intimation  to  the  Development  Commissioner  concerned,  carry  out  the 
investigation, inspection, search or seizure in the Special Economic Zone or in a Unit if such agency or 
officer  has  reasons  to  believe  (reasons  to  be  recorded  in  writing)  that  a  notified  offence  has  been 
committed or is likely to be committed in the Special Economic Zone: 

Provided  that  no  investigation,  inspection,  search  or  seizure  shall  be  carried  out  in  a  Special 
Economic Zone by any agency or officer other than those referred to in sub-section (2) or sub-section (3) 
of section 21 without prior approval of the Development Commissioner concerned: 

Provided further that any officer or agency, if so authorised by the Central Government, may carry 
out  the investigation,  inspection,  search  or seizure in the  Special  Economic  Zone  or  Unit  without  prior 
intimation or approval of the Development Commissioner. 

23. **Designated Courts to try suits and notified offences.**—(1) The State Government, in which the 
Special Economic Zone is situated, may, with the concurrence of the Chief Justice of the High Court of 
that State, designate one or more courts— 

  (a) to try all suits of a civil nature arising in the Special Economic Zone; and 

  (b) to try notified offences committed in the Special Economic Zone. 

(2) No court, other than the court designated under sub-section (1), shall try any suit or conduct the 
trial of any notified offence referred to in that sub-section: 

Provided that the courts, in which any suit of a civil nature in a Special Economic Zone had been filed 
before the commencement of this Act, shall continue to try such suit after such commencement: 

Provided further that the courts, in which any trial of any notified offence is being conducted before 
the  commencement  of  this  Act,  shall  continue  to  conduct  the  trial  of  such  offence  after  the 
commencement of this Act: 

Provided also that the courts competent to try any notified offence, before the commencement of this 
Act, shall conduct the trial in respect of such offence after the commencement of this Act until the courts 
have  been  designated  under  sub-section  (1)  and  all  such  cases  relating  to  such trials  shall thereafter  be 
transferred to such courts so designated which shall conduct the trial from the stage at which such cases 
were so transferred. 

24. **Appeal to High Court.**—Any person aggrieved, by any decision or order of the court designated 
under sub-section (1) of section 23, may file an appeal to the High Court within sixty days from the date 
of communication of the decision or order of the courts so designated to him on any question of fact  or 
law arising out of such orders: 

Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause 
from filing an appeal within the said period, allow it to be filed within a further period not exceeding sixty 
days. 

*Explanation.*—In section 23 and in this section  “High Court” means the High Court of the State in 
which the Special Economic Zone is situated. 

25. **Offences by companies.**—(1) Where an offence has been committed by a company, every 
person, who at the time the offence was committed was in charge of, and was responsible to, the company 
for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of 
the offence and shall be liable to be proceeded against and punished accordingly: 

Provided  that  nothing  contained  in  this  sub-section  shall  render  any  such  person  liable  to  any 
punishment  provided  for  the  offence,  if  he  has  proved  that  the  offence  was  committed  without  his 
knowledge or that he had exercised all due diligence to prevent the commission of such offence. 

(2) Notwithstanding anything contained in sub-section (1), where an offence has been committed by a 
company and it is proved that the offence has been committed with the consent or connivance of, or is 
attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, 
such director, manager, secretary or other officer shall also be deemed to be guilty of the offence and shall 
be liable to be proceeded against and punished accordingly.

*Explanation.*—For the purposes of this section,— 

(a) “company” means any body corporate and includes a firm or other association of individuals; 

and 

(b) “director”, in relation to a firm, means a partner in the firm.

##CHAPTER VI 

###SPECIAL FISCAL PROVISIONS FOR SPECIAL ECONOMIC ZONES 

26. **Exemptions, drawbacks and concessions to every Developer and entrepreneur.**—(1) Subject 
to the provisions of sub-section (2), every Developer and the entrepreneur shall be entitled to the 
following exemptions, drawbacks and concessions, namely:— 

  (a) exemption from any  duty  of  customs,  under  the  Customs  Act,  1962  (52  of  1962)  or  the 
Customs  Tariff  Act,  1975  (51  of  1975)  or  any  other  law  for  the  time  being  in  force,  on  goods 
imported into, or services provided in, a Special Economic Zone or a Unit, to carry on the authorised 
operations by the Developer or entrepreneur; 

  (b) exemption  from  any  duty  of  customs,  under  the  Customs  Act,  1962  (52  of  1962)  or  the 
Customs Tariff Act, 1975 (51 of 1975) or any other law for the time being in force, on goods exported 
from, or services provided, from a Special Economic Zone or from a Unit, to any place outside India; 

  (c) exemption  from  any  duty  of  excise,  under  the  Central  Excise  Act,  1944  (1  of  1944)  or  the 
Central Excise Tariff Act, 1985 (5 of 1986) or any other law for the time being in force, on goods 
brought from Domestic Tariff Area to a Special Economic Zone or Unit, to carry on the authorised 
operations by the Developer or entrepreneur; 

  (d) drawback or such other benefits as may be admissible from time to time on goods brought or 
services provided from the Domestic Tariff Area into a Special Economic Zone or Unit or services 
provided in a Special Economic Zone or Unit by the service providers located outside India to carry 
on the authorised operations by the Developer or entrepreneur; 

  (e) exemption from service tax under Chapter V of the Finance Act, 1994 (32 of 1994) on taxable 
services provided to a Developer or Unit to carry on the authorised operations in a Special Economic 
Zone; 

  (f) exemption from the securities transaction tax leviable under section 98 of the Finance (No. 2) 
Act, 2004 (23 of 2004) in case the taxable securities transactions are entered into by a non-resident 
through the International Financial Services Centre; 

  (g) exemption  from  the  levy  of  taxes  on  the  sale  or  purchase  of  goods  other  than  newspapers 
under the Central Sales Tax Act, 1956 (74 of 1956) if such goods are meant to carry on the authorised 
operations by the Developer or entrepreneur. 

(2) The  Central  Government  may  prescribe,  the  manner  in  which,  and,  the  terms  and  conditions 
subject  to  which,  the  exemptions,  concessions,  drawback  or  other  benefits  shall  be  granted  to  the 
Developer or entrepreneur under sub-section (1). 

27. **Provisions  of  Income-tax  Act,  1961  to  apply  with  certain  modification  in  relation  to 
Developers and entrepreneurs.**—The provisions of the Income-tax Act, 1961 (43 of 1961), as in force 
for  the  time  being,  shall  apply  to,  or  in  relation  to,  the  Developer  or  entrepreneur  for  carrying  on  the 
authorised  operations in  a Special  Economic  Zone  or  Unit  subject  to the  modifications specified  in the 
Second Schedule. 

28. **Duration of goods or services in Special Economic Zones.**—The  Central  Government  may 
prescribe the period during which any  goods brought into, or services provided in, any Unit or Special 
Economic Zone without payment of taxes, duties or cess shall remain or continue to be provided in such 
Unit or Special Economic Zone. 

29. **Transfer of ownership and removal of goods.**—The transfer of ownership in any goods brought 
into, or produced or manufactured in, any Unit or Special Economic Zone or removal thereof from such 
Unit  or  Zone  shall  be  allowed,  subject  to  such  terms  and  conditions  as  the  Central  Government  may 
prescribe. 

30. **Domestic clearance by Units.**—Subject  to  the  conditions  specified  in  the  rules  made  by  the 
Central Government in this behalf,— 

(a) any goods removed from a Special Economic Zone to the Domestic Tariff Area shall be 
chargeable  to  duties  of  customs  including  anti-dumping,  countervailing  and  safeguard  duties  under 
the  Customs  Tariff  Act,  1975  (51  of  1975),  where  applicable,  as  leviable  on  such  goods  when 
imported; and 

(b) the  rate  of  duty  and  tariff  valuation,  if  any,  applicable  to  goods  removed  from  a  Special 
Economic Zone shall be at the rate and tariff valuation in force as on the date of such removal, and 
where such date is not ascertainable, on the date of payment of duty. 

##CHAPTER VII 

###SPECIAL ECONOMIC ZONE AUTHORITY 

31. **Constitution of Authority.**— (1) The Central Government shall, by notification in the Official 
Gazette, constitute, for every Special Economic Zone established by it before the commencement of this 
Act or which may be established after such commencement by the Central Government, an Authority to 
be called the ...... (name of the Special Economic Zone) Authority to exercise the powers conferred on, 
and discharge the functions assigned to, it under this Act: 

Provided that in respect of existing Special Economic Zones established by the Central Government, 
such  Authority  shall  be  constituted  by  the  Central  Government  within  six  months  from  the  date  of 
commencement of this Act: 

Provided  further  that  until  such  Authority  is  constituted,  the  person  or  the  authority  (including  the 
Development  Commissioner)  exercising  control  over  such  existing  Special  Economic  Zones  shall 
continue to exercise such control over the Special Economic Zone till the Authority is constituted.

(2) Every Authority shall be a body corporate by the name aforesaid, having perpetual succession and 
a  common  seal,  with  a  power,  subject  to  the  provisions  of  this  Act,  to  acquire,  hold  and  dispose  of 
property, both movable and immovable, and to contract and shall, by the said name, sue and be sued. 

(3) The head office of every Authority shall be at such place as the Central Government may specify 
in the notification referred to in sub-section (1). 

(4) Any  Authority  may,  with  the  previous  approval  of  the  Central  Government,  establish  branch 
offices at other places in India. 

(5) Every Authority shall consist of— 

  (a) the  Development  Commissioner  of  the  Special  Economic  Zone  over  which  the  Authority 
exercises its jurisdiction—Chairperson, *ex officio*;

  (b) two  officers  of  the  Central  Government  to  be  nominated  by  that  Government  having 
knowledge of, or experience in, dealing with matters relating to Special Economic Zones—Members, 
*ex officio*; 

  (c) an officer of the Government of India in the Ministry or Department dealing with commerce 
on matters relating to Special Economic Zone—Member, *ex officio*;

  (d) not more than two persons, being entrepreneurs or their nominee, to be  nominated  by  the 
Central Government—Members, *ex officio*;

(6) The term of office of the Members of an Authority (other than *ex officio* Members) and  the 
manner of filling of vacancies shall be such as may be prescribed. 

(7) An Authority may associate with itself in such manner, subject to such conditions and for such 
purposes  as  may  be  prescribed,  any  person  whose  assistance  or  advice  it  requires  in  discharging  its 
functions effectively and that person shall be entitled to receive such allowances or fees as may be fixed 
by the Authority. 

(8) One-third  of  the  total  Members  of  the  Authority  shall  form  a  quorum,  and  all  the  acts  of  the 
Authority shall be decided by a majority of the Members present. 

(9) No act or proceeding of an Authority shall be invalidated merely by reason of— 

  (a) any vacancy in, or any defect in the constitution of, the Authority; or 

  (b) any defect in the appointment of a person acting as a Member of the Authority; or 

  (c) any irregularity in the procedure of the Authority not affecting the merits of the case. 

(10) Every Authority shall meet at such times and places and shall observe such rules of procedure in 
regard  to  the  transaction  of  business  at  its  meetings  (including  quorum  at  such  meetings)  as  may  be 
prescribed. 

32. **Officers of Authority and other staff.**—(1)  Every  Development  Commissioner  of  the  Special 
Economic  Zone,  for  which  he  is  appointed  as  such,  shall  be  the  chief  executive  of  the  Authority 
concerned and exercise such powers and perform such functions as may be prescribed. 

(2) Every Authority may, in addition to the officers and employees transferred to it under section 33, 
appoint  such  other  officers  and  employees,  as  it  considers  necessary  for  the  efficient  discharge  of  its 
functions under this Act. 

(3) The  method  of  appointment,  the  conditions  of  service  and  the  scales  of  pay  and  allowances  of 
such other officers and employees appointed under sub-section (2) shall be such as may be prescribed. 

33. **Special provision for transfer of officers or other employees to Authority.**—(1)  It  shall  be 
lawful for the Central Government to transfer to each Authority, by order, and with effect from such date 
or dates, as may be specified in the order, any officer or other employee holding office as such (except 
officers or other employees on deputation) in the existing Special Economic Zone concerned: 

Provided that the scale of pay of the post to which such officer or other employee is transferred shall 
not be lower than the scale of pay of the post which he was holding immediately before such transfer and 
the other terms and conditions of service (including pension, leave, provident fund and medical benefits) 
of the post to which he is transferred shall not be less favourable than the terms and conditions of service 
in relation to the post held by him immediately before such transfer: 

Provided  further  that  if,  immediately  before  the  date  of  his  transfer,  any  such  officer  or  other 
employee is officiating in a higher post under the Central Government either in a leave vacancy or in any 
vacancy of a specified duration, his pay and other allowances, if any, on transfer, shall be protected for 
the unexpired period of such vacancy and thereafter he shall be entitled to the scale of pay applicable to 
the  post  under  the  Central  Government  to  which  he  would  have  reverted  but  for  his  transfer  to  the 
Authority. 

(2) If any question arises as to whether the prescribed terms and conditions of service in respect of 
any  matter,  including  remuneration,  pension,  leave,  provident  fund  and  medical  benefits,  are  less 
favourable than those attached to the post held by an officer or other employee immediately before his 
transfer to the Authority, the decision of the Central Government in the matter shall be final. 

34. **Functions of Authority.**—(1) Subject to the provisions of this Act, it shall be the duty of each 
Authority to undertake such measures as it thinks fit for the development, operation and management of 
the Special Economic Zone for which it is constituted. 

(2) Without prejudice to the generality of the provisions of sub-section (1), the measures referred to 
therein may provide for— 

  (a) the development of infrastructure in the Special Economic Zone; 

  (b) promoting exports from the Special Economic Zone; 

  (c) reviewing the functioning and performance of the Special Economic Zone; 

  (d)  levy  user  or  service  charges  or  fees  or  rent  for  the  use  of  properties  belonging  to  the 
Authority; 

  (e) performing such other functions as may be prescribed. 

35. **Grants and loans by Central Government.**—The  Central  Government  may,  after  due 
appropriation made by Parliament by law in this behalf, make to every Authority by way of grants and 
loans or such sums of money as that Government may think fit for being utilised for the purposes of this 
Act. 

36. **Constitution of Fund and its application.**—(1) There shall be established by every Authority a 
Fund to be called the.......... (the name of the Special Economic Zone concerned) Authority Fund and there 
shall be credited thereto— 

  (a) all  sums  of  money,  which  the  Central  Government  may,  after  due  appropriation  made  by 
Parliament by law in this behalf, provide to the Authority; 

  (b) all grants or loans that may be made to the Authority under this Act; 

  (c) all sums received on account of user or service charges or fees or rent for the use of properties 
belonging to the Authority; 

  (d) all sums received by the Authority from such other sources as may be decided upon by the 
Central Government. 

(2) The Fund shall be applied for meeting— 

  (a) the salaries, allowances and other remuneration of the members, officers and other employees 
of the Authority; 

  (b) the expenses of the Authority in the discharge of its functions under section 34; 

  (c) the repayment of any loan; 

  (d) the expenses on objects and for purposes authorised by this Act; 

  (e) any other administrative expenses of the Authority. 

37. **Accounts and audit.**—(1)  Every  Authority  shall  maintain  proper  accounts  and  other  relevant 
records and prepare an annual statement of accounts in such form as  may be prescribed by the Central 
Government, in consultation with the Comptroller and Auditor-General of India. 

(2) The accounts of every Authority shall be audited by the Comptroller and Auditor-General of India 
at such intervals as may be specified by him and any expenditure incurred in connection with such audit 
shall be payable by the Authority to the Comptroller and Auditor-General of India. 

(3) The Comptroller and Auditor-General of India or any person appointed by him in connection with 
the  audit  of  the  accounts  of  the  Authority  shall  have  the  same  rights  and  privileges  and  authority  in 
connection with such audit as the Comptroller and Auditor-General of India generally has in connection 
with  the  audit  of  the  Government  accounts  and,  in  particular,  shall  have  the  right  to  demand  the 
production of books, accounts, connected vouchers and other documents and papers and to inspect any of 
the offices of the Authority. 

(4) The accounts of every Authority as certified by the Comptroller and Auditor-General of India or 
any other person appointed by him in this behalf together with the audit report thereon shall be forwarded 
annually to the Central Government and the Central Government shall cause the same to be laid before 
each House of Parliament. 

38. **Directions by Central Government.**—Every  Authority  shall  be  bound  to  carry  out  such 
directions  as  may  be  issued  to  it  from  time  to  time  by  the  Central  Government  for  the  efficient 
administration of this Act.

39. **Returns and reports.**—(1) Every Authority shall furnish to the Central Government at such time 
and in such form and manner as may be prescribed or as the Central Government may direct, such returns 
and  statements  and  such  particulars  in  regard  to  the  promotion  and  development  of  exports  and  the 
operation  and  maintenance  of  the  Special  Economic  Zone  and  Units  as  the  Central  Government  may, 
from time to time, require. 

(2) Without prejudice to the provisions of sub-section (1), every Authority shall, as soon as possible, 
after the end of each financial year, submit to the Central Government a report in such form and before 
such date, as may be prescribed, giving a true and full account of its activities, policy and programmes 
during the previous financial year. 

(3) A copy of every report received under sub-section (2) shall be laid, as soon as may be, after it is 
received, before each House of Parliament. 

40. **Power to supersede Authority.**—(1) If at any time the Central Government is of the opinion that 
an  Authority  is  unable  to  perform,  or  has  persistently  made  default  in  the  performance  of  the  duty 
imposed  on  it  by  or  under  this  Act  or  has  exceeded  or  abused  its  powers,  or  has  wilfully  or  without 
sufficient cause, failed to comply with any direction issued by the Central Government under section 38, 
the Central Government may, by notification, supersede that Authority for such period not exceeding six 
months, as may be specified in the notification: 

Provided that before issuing a notification under this sub-section, the Central Government shall give 
reasonable  time  to  that  Authority  to  make  representation  against  the  proposed  supersession  and  shall 
consider the representations, if any, of the Authority. 

(2) Upon the publication of a notification under sub-section (1) superseding the Authority,— 

  (a) the Chairperson and other Members of the Authority shall, notwithstanding that their term of 
office has not expired as from the date of supersession, vacate their offices as such; 

  (b) all  the  powers,  functions  and  duties  which  may,  by  or  under  the  provisions  of  this  Act,  be 
exercised or discharged by or on behalf of the Authority shall, during the period of supersession, be 
exercised and performed by such person or persons as the Central Government may direct; 

  (c) all property vested in the Authority shall, during the period of supersession, vest in the Central 
Government. 

(3) On  the  expiration  of  the  period  of  supersession  specified  in  the  notification  issued  under 
sub-section (1), the Central Government may— 

  (a) extend the period of supersession for such further period not exceeding six months; or 

  (b) reconstitute the Authority in the manner provided in section 31. 

41. **Members,  officers  and  other  employees  of  Authority  to  be  public  servants.**—All  Members, 
officers and other employees of every Authority, shall, when acting or purporting to act in pursuance of 
any of the provisions of this Act or the rules made thereunder, be deemed to be public servants within the 
meaning of section 21 of the Indian Penal Code (45 of 1860). 

##CHAPTER VIII 

###MISCELLANEOUS 

42. **Reference of dispute.**—(1)  Notwithstanding  anything  contained  in  any  other  law  for  the  time 
being in force, if— 

  (a) any dispute of civil nature arises among two or more entrepreneurs or two or more Developers 
or between an entrepreneur and a Developer in the Special Economic Zone; and 

  (b) the court or the courts to try suits in respect of such dispute had not been designated under 
sub-section (1) of section 23, 

such dispute shall be referred to arbitration: 

Provided that no dispute shall be referred to the arbitration on or after the date of the designation 
of the court or courts under sub-section (1) of section 23. 

(2) Where a dispute has been referred to arbitration under sub-section (1), the same shall be settled or 
decided by the arbitrator to be appointed by the Central Government. 

(3) Save as otherwise provided under this Act, the provisions of the Arbitration and Conciliation Act, 
1996 (26 of 1996) shall apply to all arbitration under this Act as if the proceedings for arbitration were 
referred in settlement or decision under the provisions of the Arbitration and Conciliation Act, 1996. 

43. **Limitation.**—(1)  The  period  of  limitation  in  the  case  of  any  dispute  which  is  required  to  be 
referred to arbitration shall be regulated by the provisions of the Limitation Act, 1963 (36 of 1963), as if 
the dispute was a suit and the arbitrator is civil court. 

(2) Notwithstanding anything contained in sub-section (1), the arbitrator may admit a dispute after the 
expiry of the period of limitation, if the applicant satisfies the arbitrator that he had sufficient cause for 
not referring the dispute within such period. 

44. **Applicability of provisions of this Act to existing Special Economic Zones.**—All  the 
provisions of this Act (except sections 3 and 4) shall, as far as may be, apply to every existing Special 
Economic Zone. 

45. **Person to whom a communication may be sent under this Act.**—A  communication  by  any 
competent authority or person under this Act may be sent to the person who has the ultimate control over 
the  affairs  of  the  Special  Economic  Zone  or  Unit  or  where  the  said  affairs  are  entrusted  to  a  manager, 
director,  chairperson,  or  managing  director,  or  to  any  other  officer,  by  whatever  name  called,  such 
communication  may  be  sent  to  such  manager,  director,  chairperson,  or  managing  director  or  any  other 
officer. 

46. **Identity Card.**—Every  person,  whether  employed  or  residing  or  required  to  be  present  in  a 
Special Economic Zone, shall be provided an identity card by every Development Commissioner of such 
Special Economic Zone, in such form and containing such particulars as may be prescribed. 

47. **Authorities responsible for administration.**—Any authority which has been conferred upon any 
power,  or,  is,  required  to  discharge  any  function  under  any  Central  or  State  Act,  may,  subject  to  the 
provisions of this Act, exercise such power or discharge such functions in any Special Economic Zone 
under that Act. 

48. **Protection of action taken in good faith.**—No suit, prosecution or other legal proceeding shall 
lie against the Central Government or any Chairperson, Member, officer or other employee of the Board 
or  the  Approval  Committee  or  the  Authority  or  Development  Commissioner  for  anything  done  or 
intended to be done in good faith under this Act. 

49. **Power to modify provisions of this Act or other enactments in relation to Special Economic 
Zones.**—(1) The  Central Government  may,  by  notification,  direct that  any  of  the  provision  of  this  Act 
(other than sections 54 to 56) or any other Central Act or any rules or regulations made thereunder or any 
notification or order issued or direction given thereunder (other than the provisions relating to making of 
the rules or regulations) specified in the notification— 

  (a) shall  not  apply  to  a  Special  Economic  Zone  or  a  class  of  Special  Economic  Zones  or  all 
Special Economic Zones; or 

  (b) shall apply to a Special Economic Zone or a class of Special Economic Zones or all Special 
Economic Zones only with such exceptions, modification and adaptation, as may be specified in the 
notification: 

  Provided  that  nothing  contained in  this  section  shall apply  to  any  modifications  of  any  Central 
Act or any rule or regulation made thereunder or any notification or order issued or direction given or 
scheme made thereunder so far as such modification, rule, regulation, notification, order or direction 
or  scheme  relates  to  the  matters  relating  to  trade  unions,  industrial  and  labour  disputes,  welfare  of 
labour including conditions of work, provident funds, employers' liability, workmen's compensation, 
invalidity and old age pensions and maternity benefits applicable in any Special Economic Zones. 

(2) A copy of every notification proposed to be issued under sub-section (1), shall be laid in draft 
before each House of Parliament, while it is in session, for a total period of thirty days which may be 
comprised in one session or in two or more successive sessions, and if, before the expiry of the session 
immediately  following  the  session  or  the  successive  sessions  aforesaid,  both  Houses  agree  in 
disapproving  the  issue  of  the  notification  or  both  Houses  agree  in  making  any  modification  in  the 
notification,  the  notification  shall  not  be  issued  or,  as  the  case  may  be,  shall  be  issued  only  in  such 
modified form as may be agreed upon by both the Houses. 

50. **Power of State Government to grant exemption.**—The  State  Government  may,  for  the 
purposes of giving effect to the provisions of this Act, notify policies for Developers and Units and take 
suitable steps for enactment of any law— 

  (a) granting  exemption  from  the  State  taxes,  levies  and  duties  to  the  Developer  or  the 
entrepreneur; 

  (b) delegating  the  powers  conferred  upon  any  person  or  authority  under  any  State  Act  to  the 
Development Commissioner in relation to the Developer or the entrepreneur. 

51. **Act to have overriding effect.**—The  provisions  of  this  Act  shall  have  effect  notwithstanding 
anything inconsistent therewith contained in any other law for the time being in force or in any instrument 
having effect by virtue of any law other than this Act. 

52. **Certain provisions not to apply.**—(1)  The  provisions  contained  in  the  Chapter  XA  of  the 
Customs Act, 1962 (52 of 1962) and the Special Economic Zones Rules, 2003 and the Special Economic 
Zones (Customs Procedure) Regulations, 2003 made thereunder shall not, with effect from such date as 
the Central Government by notification appoint, apply to the Special Economic Zones. 

(2) Notwithstanding  anything  contained  in  sub-section  (1),  all  offences  committed,  before  the 
commencement of this Act, under any provisions of the Customs Act, 1962 (52 of 1962) and the Special 
Economic Zones Rules, 2003 and the Special Economic Zones (Customs Procedure) Regulations, 2003 
made thereunder, shall continue to be governed by the said Act or rules, as the case may be. 

(3) Anything done or any action taken or purported to have been done or taken including any rule, 
notification, inspection, order or notice made or issued or any permission or authorisation or exemption 
granted  or  any  document  or  instrument  executed  under  the  said  provisions  of  the  Act,  rules  and 
regulations referred to in sub-section (1) shall, in so far as they are not inconsistent with the provisions of 
this  Act,  be  deemed  to  have  been  done  or  taken  or made  or  issued  or  granted under the corresponding 
provisions of the Act or rules or regulations referred to in that sub-section. 

53. **Special Economic Zones to be ports, airports, inland container depots, land stations, etc., in 
certain cases.**—A  Special  Economic  Zone  shall,  on  and  from  the  appointed  day,  be  deemed  to  be  a 
territory outside the customs territory of India for the purposes of undertaking the authorised operations. 

(2) A Special Economic Zone shall,  with  effect  from  such  date  as  the  Central  Government  may 
notify, be deemed to be a port, airport, inland container depot, land station and land customs stations, as 
the case may be, under section 7 of the Customs Act, 1962 (52 of 1962): 

Provided that for the purposes of this section, the Central Government may notify different dates for 
different Special Economic Zones. 

54. **Amendment to First Schedule.**—(1) The Central Government may, having regard to the objects 
of this Act, and if it considers necessary or expedient so to do, by notification add to, or as the case may 
be, omit from the First Schedule any enactment specified therein. 

(2)  A  copy  of  every  notification  proposed  to  be  issued  under  sub-section  (1),  shall  be  laid  in  draft 
before  each  House  of  Parliament,  while  it  is  in  session,  for  a  total  period  of  thirty  days  which  may  be 
comprised in one session or in two or more successive sessions, and if, before the expiry of the session 
immediately  following  the  session  or  the  successive  sessions  aforesaid,  both  Houses  agree  in 
disapproving  the  issue  of  the  notification  or  both  Houses  agree  in  making  any  modification  in  the 
notification,  the  notification  shall  not  be  issued  or,  as  the  case  may  be,  shall  be  issued  only  in  such 
modified form as may be agreed upon by both the Houses. 

55. **Power to make rules.**—(1)  The  Central  Government  may,  by  notification,  make  rules  for 
carrying out the provisions of this Act. 

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may 
provide for all or any of the following matters, namely:— 

  (a) the  infrastructure  facilities  necessary  for  the  development  of  the  Special  Economic  Zones 
under clause (p) and services in the Special Economic Zones under clause (z) of section 2; 

  (b) the  period  within  which  the  person  concerned  shall  obtain  the  concurrence  of  the  State 
Government under sub-section (3) of section 3; 

  (c) the form and the manner in which a proposal may be made and the particulars to be contained 
therein under sub-section (5) of section 3; 

  (d) the  period  within  which  the  State  Government  may  forward  the  proposal  together  with  its 
recommendation under sub-section (6) of section 3; 

  (e) the requirements subject to which the Board may approve, modify or reject the proposal under 
sub-section (8) of section 3; 

  (f) the  period  within  which  the  grant  of  letter  of  approval  shall  be  communicated  to  the  State 
Government or Developer or entrepreneur under sub-section (10) of section 3; 

  (g) the  other  requirements  for  notifying  the  specifically  identified  area  in  a  State  as  a  Special 
Economic Zone under sub-section (1) of section 4; 

  (h) the terms, conditions and limitations subject to which the goods or services exported out of, or 
imported into, or procured from the Domestic Tariff Area to, a Special Economic Zone, be exempt 
from payment of taxes, duties, or cess under section 7; 

  (i) the procedure for transfer of letter of approval in case of suspension of letter of approval of a 
Developer under clause (a) of sub-section (9) of section 10; 

  (j) the  form  and  the  manner  in  which  a  proposal  may  be  submitted  and  the  particulars  to  be 
contained therein under sub-section (1) of section 15; 

  (k) the time within which a person aggrieved by the order of the Approval Committee may prefer 
an appeal under sub-section (4) of section 15; 

  (l) the  form  in  which  the  appeal  shall  be  made  and  the  fees  for  making  such  appeal  under 
sub-section (6) of section 15;

  (m) the procedure for disposing of an appeal under sub-section (7) of section 15; 

  (n) the requirements (including the period for which a Unit may be set up) subject to which the 
proposal may be approved, modified or rejected under clause (a) of sub-section (8) of section 15; 

  (o) the terms and conditions for the Unit subject to which it shall undertake authorised operations 
under clause (b) of sub-section (8) of section 15 and the obligations and entitlements of the Unit; 

  (p) the time within which a person aggrieved by the order of the Approval Committee may prefer 
an appeal under sub-section (4) of section 16; 

  (q) the  form  in  which  the  appeal  shall  be  made  and  the  fees  for  making  such  appeal  under 
sub-section (6) of section 16; 

  (r) the procedure for disposing of an appeal under sub-section (7) of section 16; 

  (s) the form and the manner in which an application may be made for setting up of an Offshore 
Banking Unit in a Special Economic Zone under sub-section (1) of section 17; 

  (t) the requirements for setting up and operation of an International Financial Services Centre in a 
Special Economic Zone under sub-section (1) of section 18; 

  (u) the  requirements  and  terms  and  conditions  subject  to  which  a  Unit  in  the  International 
Financial Services Centre may be set up and operated in a Special Economic Zone under sub-section 
(2) of section 18; 

  (v) the form of single application for obtaining any licence, permission or registration or approval 
under clause (a) of section 19; 

  (w) the  form  of  single  return  or  information  to  be  furnished  by  an  entrepreneur  or  Developer 
under clause (c) of section 19; 

  (x) the  manner  in  which  and  the  terms  and  conditions  subject  to  which  the  exemptions, 
concessions, draw back or other benefits shall be granted to every Developer and entrepreneur under 
sub-section (2) of section 26; 

  (y)  the  period  during  which  any  goods  brought  into,  or  services  provided  in,  any  Special 
Economic Zone shall remain or continue to be provided in such Unit or Special Economic Zone under 
section 28; 

  (z) the terms and conditions subject to which transfer of ownership in any goods brought into, or 
produced or manufactured in, any Unit or Special Economic Zone, or removal thereof from such Unit 
or Zone, shall be allowed under section 29; 

  (za) the conditions subject to which the Units shall be entitled to sell the goods manufactured in a 
Special Economic Zone to the Domestic Tariff Area under section 30; 

  (zb) the term of office of the Members, other than ex officio Members, of every Authority and the 
manner of filling of vacancies under sub-section (6) of section 31; 

  (zc) the  manner  in  which  and  the  conditions  subject  to  which  and  the  purposes  for  which  any 
person may be associated under sub-section (7) of section 31; 

  (zd) the times and the places of meetings and the procedure to be followed in the transaction of 
business at the meetings under sub-section (10) of section 31; 

  (ze) the powers and the functions of every Development Commissioner under sub-section (1) of 
section 32; 

  (zf) the method of appointment of officers and other employees of every Authority, conditions of 
their service and the scale of pay and allowances under sub-section (3) of section 32; 

  (zg) the other functions to be performed by the Authority under clause (e) of sub-section (2) of 
section 34; 

  (zh)  the  form  in  which  the  accounts  and  other  relevant  records  of  every  Authority  shall  be 
maintained and annual statement of accounts shall be prepared under sub-section (1) of section 37; 

  (zi) the form and the manner in which and the time at which every Authority shall furnish returns 
and statements and other particulars to the Central Government under sub-section (1) of section 39; 

  (zj)  the  form  in  which  and  the  date  before  which  every  Authority  shall  furnish  to  the  Central 
Government the report of its activities, policy and programmes under sub-section (2) of section 39; 

  (zk) the form in which and the particulars to be contained in the identity cards under section 46; 

  (zl) any other matter which, is to be, or may be, prescribed. 

(3) Every rule made by the Central Government under this Act shall be laid, as soon as may be after it 
is made, before each House of Parliament, while it is in session, for a total period of thirty days which 
may be comprised in one session or in two or more successive sessions, and if, before the expiry of the 
session  immediately  following  the  session  or  the  successive  sessions  aforesaid,  both  Houses  agree  in 
making any modification in the rule or both Houses agree that the rule should not be made, the rule shall 
thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that 
any such modification or annulment shall be without prejudice to the validity of anything previously done 
under that rule. 

56. **Power to remove difficulties.**—(1) If any difficulty arises in giving effect to the provisions of 
this Act, the Central Government may, by order published in the Official Gazette, make such provisions 
not  inconsistent  with  the  provisions  of  this  Act,  as  may  appear  to  it  to  be  necessary  or  expedient  for 
removing the difficulty: 

Provided that no such order shall be made under this section after the expiration of two years from the 
date of commencement of this Act. 

(2) Every order made under this section shall be laid, as soon as may be after it is made, before each 
House of Parliament. 

57. **Amendment of certain enactments.**—With  effect  from  such  date  as  the  Central  Government 
may,  by  notification,  appoint,  the  enactments  specified  in  the  Third  Schedule  shall  be  amended  in  the 
manner specified therein: 

Provided  that  different  dates  may  be  appointed  on  which  the  amendments  specified  in  the  Third 
Schedule shall apply to a particular Special Economic Zone or a class of Special Economic Zones or all 
Special Economic Zones. 

58. **Savings.**—All  rules  made  or  purporting  to  have  been  made  or  all  notifications  issued  or 
purporting to have been issued under any Central Act relating to the Special Economic Zones shall, in so 
far as they relate to matters for which provision is made in this Act or rules made or notification issued 
thereunder and are not inconsistent therewith, be deemed to have been made or issued under this Act as if 
this Act had been in force on the date on which such rules were made or notifications were issued and 
shall continue to be in force unless and until they are superseded by any rules made or notifications issued 
under this Act. 



 
 
##THE FIRST SCHEDULE

(See sections 7 and 54)

###ENACTMENTS

1. The Agricultural Produce Cess Act, 1940 (27 of 1940).

2. The Coffee Act, 1942 (7 of 1942).

3. The Mica Mines Labour Welfare Fund Act, 1946 (22 of 1946).

4. The Rubber Act, 1947 (24 of 1947).

5. The Tea Act, 1953 (29 of 1953).

6. The Salt Cess Act, 1953 (49 of 1953).

7. The Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955).

8. The Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957).

9. The Sugar (Regulation of Production) Act, 1961 (55 of 1961).

10. The Textiles Committee Act, 1963 (41 of 1963).

11. The Produce Cess Act, 1966 (15 of 1966).

12. The Marine Products Export Development Authority Act, 1972 (13 of 1972).

13. The Coal Mines (Conservation and Development) Act, 1974 (28 of 1974).

14. The Oil Industry (Development) Act, 1974 (47 of 1974).

15. The Tobacco Cess Act, 1975 (26 of 1975).

16. The Additional Duties of Excise (Textile and Textile Articles) Act, 1978 (40 of 1978).

17. The Sugar Cess Act, 1982 (3 of 1982).

18. The Jute Manufactures Cess Act, 1983 (28 of 1983).

19. The Agricultural and Processed Food Products Export Cess Act, 1985 (3 of 1986).

20. The Spices Cess Act, 1986 (11 of 1986).

21. The Research and Development Cess Act, 1986 (32 of 1986).

 
 
##THE SECOND SCHEDULE 

(See section 27) 

###MODIFICATIONS TO THE INCOME-TAX ACT, 1961 

(43 OF 1961) 

(a) in section 10,—

  (A) in clause (15), after sub-clause (vii), the following clause shall be inserted at the end, namely:—

    “(viii) any income by way of interest received by a non-resident or a person who is not ordinarily 
resident, in India on a deposit made on or after the 1st day of April, 2005 in an Offshore Banking Unit 
referred to in clause (u) of section 2 of the Special Economic Zones Act, 2005;”;

  (B) in clause (23G), after the words, brackets, figures and letters “sub-section (4) of section 80-IA”, 
the words brackets, figures and letters “or sub-section (3) of section 80-IAB” shall be inserted; 

  (C) in clause (34), the following Explanation shall be inserted, namely:—

“*Explanation.*—For the removal of doubts, it is hereby declared that the dividend referred to in 
section  115-O  shall  not  be  included  in  the  total  income  of  the  assessee,  being  a  Developer  or 
entrepreneur.”; 

(b) in section 10A, after sub-section (7A), the following sub-section shall be inserted, namely:— 

  “(7B) The  provisions  of  this section  shall  not apply  to  any  undertaking,  being  a  Unit  referred to in 
clause  (zc)  of  section  2  of  the  Special  Economic  Zones  Act,  2005,  which  has  begun  or  begins  to 
manufacture or produce articles or things or computer software during the previous year relevant to the 
assessment year commencing on or after the 1st day of April, 2006 in any Special Economic Zone.”; 

(c) after section 10A, the following section shall be inserted, namely:— 

  '10AA.  Special  provisions  in  respect  of  newly  established  Units  in  Special  Economic  Zones.—(1) 
Subject  to  the  provisions  of  this  section,  in  computing  the  total  income  of  an  assessee,  being  an 
entrepreneur as referred to in clause (j) of section (2) of the Special Economic Zones Act, 2005, from his 
Unit, who begins to manufacture or produce articles or things or provide any services during the previous 
year relevant to any assessment year commencing on or after the 1st day of April, 2006, a deduction of— 

    (i) hundred per cent. of profits and gains derived from the export, of such articles or things or 
from services for a period of five consecutive assessment years beginning with the assessment year 
relevant  to  the  previous  year  in  which  the  Unit  begins  to  manufacture  or  produce  such  articles  or 
things or provide services, as the case may be, and fifty per cent. of such profits and gains for further 
five assessment years and thereafter; 

    (ii) for the next five consecutive assessment years, so much of the amount not exceeding fifty per 
cent. of the profit as is debited to the profit and loss account of the previous year in respect of which 
the deduction is to be allowed and credited to a reserve account (to be called the “Special Economic 
Zone Re-investment Reserve Account”) to be created and utilised for the purposes of the business of 
the assessee in the manner laid down in sub-section (2). 

  (2) The deduction under clause (ii) of sub-section (1) shall be allowed only if the following conditions 
are fulfilled, namely:— 

    (a) the amount credited to the Special Economic Zone Re-investment Reserve Account is to be 
utilised— 

      (i) for the purposes of acquiring machinery or plant which is first put to use before the expiry 
of a period of three years following the previous year in which the reserve was created; and 

      (ii)  until  the  acquisition  of  the  machinery  or  plant  as  aforesaid,  for  the  purposes  of  the 
business  of  the  undertaking  other  than  for  distribution  by  way  of  dividends  or  profits  or  for 
remittance outside India as profits or for the creation of any asset outside India; 

    (b) the particulars, as may be specified by the Central Board of Direct Taxes in this behalf, under 
clause  (b)  of  sub-section  (IB)  of  section  10A  have  been  furnished  by  the  assessee  in  respect  of 
machinery or plant along with the return of income for the assessment year relevant to the previous 
year in which such plant or machinery was first put to use. 

  (3) Where any amount credited to the Special Economic Zone Re-investment Reserve Account under 
clause (ii) of sub-section (1),— 

    (a) has been utilised for any purpose other than those referred to in sub-section (2), the amount so 
utilised; or 

    (b) has not been utilised before the expiry of the period specified in sub-clause (i) of clause (a) of 
sub-section (2), the amount not so utilised, 

shall be deemed to be the profits,— 

    (i) in a case referred to in clause (a), in the year in which the amount was so utilised; or 

    (ii) in a case referred to in clause (b), in the year immediately following the period of three years 
specified in sub-clause (i) of clause (a) of sub-section (2), 

and shall be charged to tax accordingly: 

Provided that where in computing the total income of the Unit for any assessment year, its profits and 
gains  had  not  been  included  by  application  of  the  provisions  of  sub-section  (7B)  of  section  10A,  the 
undertaking  being  the  Unit  shall  be  entitled  to  deduction  referred  to  in  this  sub-section  only  for  the 
unexpired period of ten consecutive assessment years and thereafter it shall be eligible for deduction from 
income as provided in clause (ii) of sub-section (1): 

*Explanation.*—For  the  removal  of  doubts,  it  is  hereby  declared  that  an  undertaking  being  the  Unit, 
which  had  already  availed  before  the  commencement  of  the  Special  Economic  Zone  Act,  2005,  the 
deductions referred to in section 10A for ten consecutive assessment years, such Unit shall not be eligible 
for deduction from income under this section: 

Provided further that where a Unit initially located in any free trade zone or export processing zone is 
subsequently  located  in  a  Special  Economic  Zone  by  reason  of  conversion  of  such  free  trade  zone  or 
export  processing  zone  into  a  Special  Economic  Zone,  the  period  of  ten  consecutive  assessment  years 
referred to above shall be reckoned from the assessment year relevant to the previous year in which the 
Unit  began  to  manufacture,  or  produce  or  process  such  articles  or  things  or  services  in  such  free  trade 
zone or export processing zone: 

Provided also that where a Unit initially located in any free trade zone or export processing zone is 
subsequently  located  in  a  Special  Economic  Zone  by  reason  of  conversion  of  such  free  trade  zone  or 
export processing zone  into a Special Economic Zone and has completed the period of ten consecutive 
assessment  years  referred  to  above,  it  shall  not  be  eligible  for  deduction  from  income  as  provided  in 
clause (ii) of sub-section (1) with effect from the 1st day of April, 2006. 

(4) This section applies to any undertaking being the Unit, which has begun or begins to manufacture 
or  produce  articles  or  things  or  services  during  the  previous  year  relevant  to  the  assessment  year 
commencing on or after the 1st day of April, 2006, in any Special Economic Zone. 

(5) Where  any  undertaking  being  the  Unit  which  is  entitled  to  the  deduction  under  this  section  is 
transferred, before the expiry of the period specified in this section, to another undertaking, being the Unit 
in a scheme of amalgamation or demerger,— 

  (a) no deduction shall be admissible under this section to the amalgamating or the demerged Unit, 
being the company for the previous year in which the amalgamation or the demerger takes place; and 

  (b) the  provisions  of  this  section  shall,  as  they  would  have  applied  to  the  amalgamating  or  the 
demerged Unit being the company as if the amalgamation or demerger had not taken place.
 
(6) Loss referred to in sub-section (1) of section 72 or sub-section (1) or sub-section (3) of section 74, 
in  so  far  as  such  loss  relates  to  the  business  of  the  undertaking,  being  the  Unit  shall  be  allowed  to  be 
carried forward or set off. 

(7) For  the  purposes  of  sub-section  (1),  the  profits  derived  from  the  export  of  articles  or  things  or 
services (including computer software) shall be the amount which bears to the profits of the business of 
the undertaking, being the Unit, the same proportion as the export turnover in respect of such articles or 
things or services bears to the total turnover of the business carried on by the assessee. 

(8) The provisions of sub-sections (5) and (6) of section 10A shall apply to the articles or things or 
services referred to in sub-section (1) as if— 

  (a) for the figures, letters and word “1st April, 2001”, the figures, letters and word “1st April, 
2006” had been substituted; 

  (b) for the word “undertaking”, the words “undertaking, being the Unit” had been substituted. 

(9) The provisions of sub-section (8) and sub-section (10) of section 80-IA shall, so far as may be, 
apply  in  relation  to  the  undertaking  referred  to  in  this  section  as  they  apply  for  the  purposes  of  the 
undertaking referred to in section 80-IA. 

*Explanation 1.*—For the purposes of this section,— 

(i) “export turnover” means the consideration in respect of export by the undertaking, being the 
Unit of articles or things or services received in, or brought into, India by the assessee but does not 
include freight, telecommunication charges or insurance attributable to the delivery of the articles or 
things  outside  India  or  expenses,  if  any,  incurred  in  foreign  exchange  in  rendering  of  services 
(including computer software) outside India; 

(ii) “export in relation to the Special Economic Zones” means taking goods or providing services 
out of India from a Special Economic Zone by land, sea, air, or by any other mode whether physical 
or otherwise; 

(iii) “manufacture” shall have the same meaning as assigned to it in clause (r) of section 2 of the 
Special Economic Zones Act, 2005; 

(iv) “relevant  assessment  year”  means  any  assessment  year  falling  within  a  period  of  fifteen 
consecutive assessment years referred to in this section; 

(v) “Special Economic Zone” and “Unit” shall have the same meanings as assigned to them under 
clause (za) and (zc) of section 2 of the Special Economic Zones Act, 2005. 

*Explanation 2.*—For  the  removal  of  doubts,  it  is  hereby  declared  that the  profits  and  gains  derived 
from on site development of computer software (including services for development of software) outside 
India shall be deemed to be the profits and gains derived from the export of computer software outside 
India; 

(d) after section 54G, the following section shall be inserted, namely:— 

  “54GA. *Exemption of capital gains on transfer of assets in cases of shifting of industrial undertaking 
from  urban  area  to  any  Special  Economic  Zone.*—(1)  Notwithstanding  anything  contained  in  section 
54G,  where  the  capital  gain  arises  from  the  transfer  of  a  capital  asset,  being  machinery  or  plant  or 
building or land or any rights in building or land used for the purposes of the business of an industrial 
undertaking situate in an urban area, effected in the course of, or in consequence of the shifting of such 
industrial undertaking to any Special Economic Zone, whether developed in any urban area or any other 
area  and  the  assessee  has within  a  period  of  one  year  before  or three  years after  the  date  on  which  the 
transfer took place,— 

  (a) purchased machinery or plant for the purposes of business of the industrial undertaking in the 
Special Economic Zone to which the said undertaking is shifted; 

  (b) acquired  building  or  land  or  constructed  building  for  the  purposes  of  his  business  in  the 
Special Economic Zone; 

  (c) shifted the original asset and transferred the establishment of such undertaking to the Special 
Economic Zone; and 

  (d) incurred  expenses  on  such  other  purposes  as  may  be  specified  in  a  scheme  framed  by  the 
Central Government for the purposes of this section,

then, instead of the capital gain being charged to income-tax as income of the previous year in which the 
transfer took place, it shall, subject to the provisions of sub-section (2), be dealt with in accordance with 
the following provisions of this section, that is to say,— 

  (i) if the amount of the capital gain is greater than the cost and expenses incurred in relation to all 
or any of the purposes mentioned in clauses (a) to (d) (such cost and expenses being hereafter in this 
section referred to as the new asset), the difference between the amount of the capital gain and the 
cost of the new asset shall be charged under section 45 as the income of the previous year; and for the 
purpose of computing in respect of the new asset any capital gain arising from its transfer within a 
period of three years of its being purchased, acquired, constructed or transferred, as the case may be, 
the cost shall be Nil; or 

  (ii) if the amount of the capital gain is equal to, or less than, the cost of the new asset, the capital 
gain shall not be charged under section 45, and for the purpose of computing in respect of the new 
asset any capital gain arising from its transfer within a period of three years of its being purchased, 
acquired, constructed or transferred, as the case may be, the cost shall be reduced by the amount  of 
the capital gain. 

*Explanation.*—In this sub-section,— 

  (a) “Special Economic Zone” shall have the meaning assigned to it in clause (za) of the Special 
Economic Zones Act, 2005; 

  (b) “urban area” means any such area within the limits of a municipal corporation or municipality 
as the Central Government may, having regard to the population, concentration of industries, need for 
proper planning of the area and other relevant factors, by general or special order, declare to be an 
urban area for the purposes of this sub-section. 

(2)  The  amount  of  capital  gain  which  is  not  appropriated  by  the  assessee  towards  the  cost  and 
expenses incurred in relation to all or any of the purposes mentioned in clauses (a) to (d) of sub-section 
(1) within one year before the date on which the transfer of the original asset took place, or which is not 
utilised by him for all or any of the purposes aforesaid before the date of furnishing the return of income 
under section 139, shall be deposited by him before furnishing such return [such deposit being made in 
any  case  not  later  than  the  due  date  applicable  in  the  case  of  the  assessee  for  furnishing  the  return  of 
income  under  sub-section  (1)  of  section  139]  in  an  account  in  any  such  bank  or  institution  as  may  be 
specified  in,  and  utilised  in  accordance  with,  any  scheme  which  the  Central  Government  may,  by 
notification, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for 
the purposes of sub-section (1), the amount, if any, already utilised by the assessee for all or any of the 
aforesaid purposes together with the amount so deposited shall be deemed to be the cost of the new asset: 

Provided that if the amount deposited under this sub-section is not utilised wholly or partly for all or 
any of the purposes mentioned in clauses (a) to (d) of sub-section (1) within the period specified in that 
sub-section, then,— 

    (i) the amount not so utilised shall be charged under section 45 as the income of the previous year 
in which the period of three years from the date of the transfer of the original asset expires; and 

    (ii) the  assessee  shall  be  entitled  to  withdraw  such  amount  in  accordance  with  the  scheme 
aforesaid.”; 

  (e) in section 80-IA, after sub-section (12), the following section shall be inserted, namely:— 

“(13) nothing contained in this section shall apply to any Special Economic Zones notified on or 
after the 1st day of April, 2005 in accordance with the scheme referred to in sub-clause (iii) of clause 
(c) of sub-section (4)”.

  (f) after section 80-IA, the following section shall be inserted, namely:— 

     “80-I AB. Deductions in respect of profits and gains by an undertaking or enterprise engaged in 
development  of  Special  Economic  Zone.—(1) Where the  gross total  income  of an  assessee,  being  a 
Developer,  includes  any  profits  and  gains  derived  by  an  undertaking  or  an  enterprise  from  any 
business of developing a Special Economic Zone, notified on or after the 1st day of April, 2005 under 
the Special Economic Zone Act, 2005, there shall, in accordance with and subject to the provisions of 
this  section,  be  allowed,  in  computing  the  total  income  of  the  assessee,  a  deduction  of  an  amount 
equal to one hundred per cent. of the profits and gains derived from such business for ten consecutive 
assessment years. 

(2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by 
him for any ten consecutive assessment years out of fifteen years beginning from the year in which a 
Special Economic Zone has been notified by the Central Government: 

Provided that where in computing the total income of any undertaking, being a Developer for any 
assessment  year,  its  profits  and  gains  had  not  been  included  by  application  of  the  provisions  of  
sub-section (13) of section 80-1A, the undertaking being the Developer shall be entitled to deduction 
referred  to  in  this  section  only  for  the  unexpired  period  of  ten  consecutive  assessment  years  and 
thereafter  it  shall  be  eligible  for  deduction  from  income  as  provided  in  sub-section  (1)  or  
sub-section (2), as the case may be: 

Provided further that in a case where an undertaking, being a Developer who develops a Special 
Economic Zone on or after the 1st day of April, 2005 and transfers the operation and maintenance of 
such  Special  Economic  Zone  to  another  Developer  (hereafter  in  this  section  referred  to  as  the 
transferee  Developer),  the  deduction  under  sub-section  (1)  shall  be  allowed  to  such  transferee 
Developer for  the  remaining  period  in the  ten  consecutive  assessment  years  as  if the  operation  and 
maintenance were not so transferred to the transferee Developer. 

(3) The provisions of sub-sections (5) and sub-sections (7) to (12) of section 80-IA shall apply to 
the Special Economic Zones for the purpose of allowing deductions under sub-section (1). 

*Explanation.*—For the purposes of this section, “Developer” and “Special Economic Zone” shall 
have the same meanings respectively as assigned to them in clauses (g) and (za) of section 2 of the 
Special Economic Zones Act, 2005”;

(g) for section 80LA, the following section shall be substituted, namely:—

  „80LA. *Deduction  in  respect  of  certain  incomes  of  Offshore  Banking  Units  and  International 
Financial Services Centre.*—(1) Where the gross total income of an assessee,— 

  (i) being  a  scheduled  bank,  or,  any  bank  incorporated  by  or  under  the  laws  of  a  country 
outside India; and having an Offshore Banking Unit in a Special Economic Zone; or 

  (ii) being a Unit of an International Financial Services Centre, 

includes  any  income  referred  to  in  sub-section  (2),  there  shall  be  allowed,  in  accordance  with  and 
subject to the provisions of this section, a deduction from such income, of an amount equal to—  

  (a) one hundred per cent of such income for five consecutive assessment  years  beginning 
with the assessment year relevant to the previous year in which the permission, under clause (a) 
of sub-section (1) of section 23 of the Banking Regulation Act, 1949 (10 of 1949) or permission 
or registration under the Securities and Exchange Board of India Act, 1992 (15 of 1992) or any 
other relevant law was obtained, and thereafter;

  (b) fifty per cent. of such income for five consecutive assessment years. 

(2) The income referred to in sub-section (1) shall be the income— 

  (a) from an Offshore Banking Unit in a Special Economic Zone; or 

  (b) from  the  business  referred  to  in  sub-section  (1)  of  section  6  of  the  Banking  Regulation 
Act,  1949  (10  of  1949)  with  an  undertaking  located  in  a  Special  Economic  Zone  or  any  other 
undertaking which develops, develops and operates or develops, operates and maintains a Special 
Economic Zone; or 

  (c) from any Unit of the International Financial Services Centre from its business for which it 
has been approved for setting up in such a Centre in a Special Economic Zone. 

(3) No deduction under this section shall be allowed unless the assessee furnishes along with the 
return of income,—

  (i) the report, in the form specified by the Central Board of Direct Taxes under clause (i) of 
sub-section (2) of section 80LA, as it stood immediately before its substitution by this section, of 
an accountant as defined in the Explanation below sub-section (2) of section 288, certifying that 
the deduction has been correctly claimed in accordance with the provisions of this section; and 

  (ii) a copy of the permission obtained under clause (a) of sub-section (1) of section 23 of the 
Banking Regulation Act, 1949 (10 of 1949). 

*Explanation.*—For the purposes of this section,— 

  (a) “International  Financial  Services  Centre”  shall  have  the  same  meaning  as  assigned  to  it  in 
clause (q) of section 2 of the Special Economic Zones Act, 2005; 

  (b) “scheduled bank” shall have the same meaning as assigned to it in clause (e) of section 2 of 
the Reserve Bank of India Act, 1934 (2 of 1934); 

  (c) “Special  Economic  Zone”  shall  have  the  same  meaning  as  assigned  to  it  in  clause  (za)  of 
section 2 of the Special Economic Zones Act, 2005; 

  (d) “Unit” shall have the same meaning as assigned to it in clause (zc) of section 2 of the Special 
Economic Zones Act, 2005; 

(h) in section 115JB, after sub-section (5), the following sub-section shall be inserted, namely:— 

  “(6) The provisions of this section shall not apply to the income accrued or arising on or after the 
1st day  of  April,  2005  from  any  business  carried  on,  or  services  rendered,  by  an  entrepreneur  or  a 
Developer, in a Unit or Special Economic Zone, as the case may be.”. 

(i) in section 115-0, after sub-section (5), the following sub-section shall be inserted, namely:— 

  “(6)  Notwithstanding  anything  contained  in  this  section,  no  tax  on  distributed  profits  shall  be 
chargeable  in  respect  of  the  total  income  of  an  undertaking  or  enterprise  engaged  in  developing  or 
developing and operating or developing, operating and maintaining a Special Economic Zone for any 
assessment year on any amount declared, distributed or paid by such Developer or enterprise, by way 
of dividends (whether interim or otherwise) on or after the 1st day of April, 2005 out of its current 
income either in the hands of the Developer or enterprise or the person receiving such dividend not 
falling under clause (23G) of section 10.”;

(j) in section 197A, after sub-section (1C), the following sub-section shall be inserted, namely:— 

  (1D) Notwithstanding anything contained in this section, no deduction of tax shall be made by the 
Offshore Banking Unit from the interest paid— 

  (a) on deposit made on or after the 1st day  of  April,  2005,  by  a  non-resident  or  a  person  not 
ordinarily resident in India; or 

  (b) on borrowings, on or after the 1st day  of  April,  2005,  from  a  non-resident  or  a  person  not 
ordinarily resident in India. 

*Explanation.*—For  the  purposes  of  this  sub-section  “Offshore  Banking  Unit”  shall  have  the  same 
meaning as assigned to it in clause (u) of section 2 of the Special Economic Zones Act, 2005.‟. 
 
 
 
 
##THE THIRD SCHEDULE 

(See section 57) 

###AMENDMENT TO CERTAIN ENACTMENTS 

###PART I 

###AMENDMENTS TO THE INSURANCE ACT, 1938 

(4 OF 1938) 

1. In section 2C, in sub-section (1), after the third proviso, insert:— 

“Provided also an insurer, being an Indian Insurance Company, insurance co-operative society or 
a  body  corporate referred  to  in  clause (c)  of this sub-section  carrying  on  the  business of  insurance, 
may carry on any business of insurance in any Special Economic Zone as defined in clause (za) of 
section 2 of the Special Economic Zones Act, 2005.”. 

2. After section 2C, insert— 

“2CA. *Power  of  Central  Government  to  apply  provisions  of  this  Act  to  Special  Economic 
Zones.*—  The  Central  Government  may,  by  notification,  direct  that  any  of  the  provisions  of  this 
Act,— 

  (a)  shall  not  apply  to  insurer,  being  an  Indian  Insurance  Company,  insurance  co-operative 
society or a body corporate referred to in clause (c) of sub-section (1) of section 2C, carrying on 
the business of insurance, in any Special Economic Zone as defined in clause (za) of section 2 of 
the Special Economic Zones Act, 2005; or 

  (b)  shall  apply  to  any  insurer,  being  an  Indian  Insurance  Company,  insurance  co-operative 
society or a body corporate referred to in clause (c) of sub-section (1) of section 2C, carrying on 
the business of insurance, in any Special Economic Zone as defined in clause (za) of section 2 of 
the Special Economic Zones Act, 2005 only with such exceptions, modifications and adaptations 
as may be specified in the notification.”. 

##PART II 

###AMENDMENTS TO THE BANKING REGULATION ACT, 1949 

(10 OF 1949) 

1. Section 53 shall be renumbered as sub-section (1) thereof and in sub-section (1) as so re-numbered, 
for “banking company or institution or to any class of banking companies”, substitute,— 

  “banking company or institution or to any class of banking companies or any of their branches 
functioning  or  located  in  any  Special  Economic  Zone  established  under  the  Special  Economic 
Zones Act, 2005.”. 

2. After sub-section (1) as so numbered, the following sub-section shall be inserted, namely:— 

“(2)  A  copy  of  every  notification  proposed  to  be  issued  under  sub-section  (1),  shall  be  laid  in 
draft before each House of Parliament, while it is in session, for a total period of thirty days which 
may be comprised in one session or in two or more successive sessions, and if, before the expiry of 
the session immediately following the session or the successive sessions aforesaid, both Houses agree 
in disapproving the issue of the notification or both Houses agree in making any modification in the 
notification, the notification shall not be issued or, as the case may be, shall be issued only in such 
modified form as may be agreed upon by both the Houses.”. 

##PART III 

###AMENDMENT TO THE INDIAN STAMP ACT, 1899 

(2 OF 1899) 

In section 3, in the proviso, after clause (2), insert,— 

'(3) any instrument executed, by, or, on behalf of, or, in favour of, the Developer, or Unit or in 
connection with the carrying out of purposes of the Special Economic Zone. 

*Explanation.*—For the purposes of this clause, the expressions “Developer”, “Special Economic 
Zone” and “Unit” shall have  meanings respectively assigned to them in clause (g), (za) and (zc) of 
section 2 of the Special Economic Zones Act, 2005.'.