|Which of the following are true about Special Economic Zone (SEZ) in India, under the SEZ Act-2005?|
|1. It is basically duty free enclaves for establishing both manufacturing and service industries.|
|2. It is considered as foreign territories only for foreign trade; domestic sales from the zones are subject to full customs duty and import policy in force.|
|3. It offers full freedom for sub-contracting.|
|4. No routine examination by customs authorities of export/import cargo.|
|Select the correct answer using the codes given below:|
A) 1, 2 and 3 only
B) 2, 3 and 4 only
C) 1 and 4 only
D) 1, 2, 3 and 4
Correct Answer: D
Solution :[d] A SEZ is a designated duty free enclave to be treated as foreign territory for the purpose of trade operations and duties and tariffs. A SEZ does not require a license for imports. Other notable features are as follows: The units must become net foreign exchange earners within 3 years SEZ are allowed manufacturing, trading and service activities. Full freedom for subcontracting. The domestic sales from the SEZ are subject to full custom duties and import policy is in force, when they sell their produce to domestic markets. There was no routine examination by the custom authorities. The corporation in SEZs will not have to pay any income tax on their profits for the first five years and only 50% of the tax for 2 more years thereafter. If half of the profit is reinvested in the corporation, the concession of 50% tax is extendable for next-3 years. For SEZ developers the raw material from cement to steel to electrical parts are subject to zero tax and duty. For the SEZ, the Government acquires vast land tracts and gives to the developers. The basic condition involves that 25% of the area of the SEZ must be used only for export related activities. Rest 75% area can be used for economical and social infrastructure. However, all SEZ benefits are applicable over the entire SEZ area. There were provisions for sector specific SEZs and Multiproduct SEZs. The Sector specific SEZ may have 7500 houses, hotels with 100 rooms, 25 bed hospital, schools and other institutions, a multiplex in 50000 sq. meters. Multiproduct SEZ are allowed to build 25000 houses. 250 room hotel and 100 bed hospital along with a multiplex with 2 lakh sq. meters.
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