SEZ, GIFT City and tax holidays — is this a do-it-yourself job?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: zone and centre regimes grant specified deductions and exemptions subject to conditions on activity, setup date and approvals.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
Is the SEZ tax holiday still open to a new unit?
The honest answer is that it depends on when the unit is established, because these regimes carry conditions tied to the setup date and are periodically closed to new entrants. A benefit that was available to a unit set up in an earlier year may simply not be open now, and reading about the regime in general rather than the conditions currently in force is how groups reach the wrong conclusion. On any new project the first step is to establish which regime a unit established today can actually enter, and on what conditions, before the location decision is taken. That decision is expensive to reverse.
What makes GIFT City different from any other Indian location?
It is a distinct regime with its own approvals, its own permitted activities and its own conditions, rather than a general concession attaching to a place. What is available depends on which activity is approved and when the unit is established, so the regime cannot usefully be assessed in the abstract. As with any conditional regime, the questions worth asking early are which activity the approval will cover, what the continuing conditions require of the unit once it is running, and what happens to the claim if the business later changes shape.
Can we move an existing unit into a zone and claim relief?
Usually not in the way people hope. These regimes are aimed at new units, and the conditions are framed to prevent an existing business being reconstituted in a favoured location to pick up a benefit. Moving people and equipment across and calling the result a new unit is precisely what those conditions are written to test. Where there is a genuine expansion — new activity, new capacity, separately identifiable from what already exists — the position is different, but it has to be evidenced from the start, in the approval documents and in the way the unit is actually run and accounted for.
What happens if we breach a condition during the holiday period?
Eligibility is tested at establishment and the conditions then continue for the life of the claim, so a breach does not affect only the future. It can put the deduction claimed in the year of the breach in issue, and it invites attention to the years before it. Conditions typically attach to the activity carried on, to the approvals held, and to how the unit is kept separate from the rest of the business, all of which drift over time. The discipline that prevents trouble is dull: test each condition against the facts annually, and record the check when it is made.
Which approvals decide whether the tax holiday actually applies?
The approvals are not administrative paperwork sitting alongside the tax position. They largely define it. What activity was approved, for which unit, and from which date will be the first things looked at when a claim is examined, and a deduction claimed for activity outside the approval is difficult to sustain however commercially sensible that activity was. This is why the application deserves care at the time it is made. Groups that describe their activity loosely in order to keep options open often find the looseness working against them years later.
Does the holiday survive a change in the unit's activity?
It can be put at risk. The claim rests on the unit carrying on the approved activity within the conditions, so a shift into something adjacent — a new line, a different service, work for a different kind of customer — is a tax question as well as a commercial one. The safe sequence is to test the change against the conditions and the approval before it is made, and to vary the approval where that is what is needed. Discovering afterwards that the activity moved outside the approval leaves nothing to fix, only exposure to quantify.
What is Schedule FA and who has to complete it?
It is the foreign asset disclosure in an Indian return, and the trigger is residential status rather than income: a resident discloses foreign bank accounts, custodial and equity holdings, foreign life insurance with a cash value, immovable property and other assets held at any time in the year, plus any beneficial interest. A non-resident does not. The obligation is disclosure-based, so it applies to an account that earned nothing, and the penalties under the black-money legislation are what make it worth getting right. See Schedule FA reporting.
How is foreign tax credit claimed in India?
By furnishing Form 67 with proof of the foreign tax — the certificate or statement from the other country's authority or payer — and by relieving the income under the specific DTAA article rather than generally. The credit is limited to the Indian tax on that income, and it is computed source by source rather than in one pool. The deadline for furnishing Form 67 has been amended more than once, so we confirm it for the year rather than assume. See foreign tax credit in India.
