A business dealing with foreign customers, whether or not exclusively is required to compete with various foreign competitors who may be operating in more favourable environment in their own countries. In order to boost such businesses, who intend to pre-dominantly engage in export activities, India had adopted a model of Special Economic Zone (SEZ) to provide level playing field to exporters located in SEZs.

Although the Act aims to ensure that the SEZ developers get maximum benefit for promoting exports, the way the provisions are framed has increased the scope of likely tax disputes. Although the law has now been in effect for more than six months, companies doing business in or with SEZs
have plenty of time to establish the correct tax positions to avoid future pain.

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