Special Economic Zone (SEZ), Export Oriented Units(EOU) are not unknown words for us.

Also many of us know that they meant for ein! treated specially for the purpose of imposition of responsi ility in connection with economic le!islations. "ut the said special treatment in #uestion may or may not form part of our knowled!es. $et%s know how these are different for such treatment&

1. Import of Capital Goods: SEZ units and units set up as export'oriented units (EOUs)
can import capital !oods at (ero duty, whereas units in the domestic tariff area ()*A) ha+e to pay at least ,.- . duty under the export promotion capital !oods (E/01) scheme. SEZ units can import construction material at (ero duty whereas EOU and )*A units can import at 23.45 . duty. 2. Import of Raw Materials: 6or exports, SEZ, EOU or )*A units can import raw materials, etc without payin! duty. 7aw materials from )*A can e procured for export production y all the units at almost the same price as deemed exports or as physical exports. EOU and SEZ units can dis urden the central sales tax (0S*) incidence, whereas )*A units cannot. 3. VAT/Service Tax Credit: *he 8A* (+alue added tax) urden can e nullified y all of them throu!h input tax credit (for EOU9)*A) or refund (for SEZ). *he ser+ice tax urden also can e nullified throu!h 0en+at credit (for EOU9)*A) or exemption (for SEZ). 4. Concept of Deemed Import: 0oncept EOU or SEZ units can !et raw materials for domestic production from )*A units at near'international prices under deemed exports or as physical exports. *he )*A units will ha+e to pay more as suppliers will not !et any enefits and the 0S* urden cannot e !ot rid of. 5. Cenvat Credit: :owe+er, on local sales, )*A units will pay excise of only -3.2; ., all of which can e taken as 0en+at credit whereas EOUs will pay a out ;<.2, . (plus 8A*), out of which the )*A uyers can take only -3.=2 . as 0en+at credit. SEZ units will e the worst'placed as they will ha+e to pay 2-.5= . (plus 8A*), out of which only -=.23 . can e taken as 0en+at credit. 6. Income tax Benefit: )*A units !et no income'tax (>*) exemption, whereas an EOU can !et exemption on ?< . of the export profits till ;<<?, whereas SEZ units can !et -<< . exemption in the first fi+e years, ,< . in the next fi+e and ,< . for the next fi+e years, su @ect to certain conditions. 7. and Val!e: EOU and )*A units can uy land anywhere and start their acti+ities and en@oy the enefit of appreciation of land +alue. >n SEZ, the units can only take land on lease from the de+elopers. 8. Infrastr!ct!re: *he price at which the EOU or )*A units will !et infrastructure like access roads and utilities mi!ht e #uite different (mostly lesser) than the price at which SEZ units may e a le to !et from the de+elopers as utilities and infrastructure that EOU or )*A units !et will e pu lic'funded whereas de+elopers will look for returns on their pri+ate fundin! for infrastructure and utilities that they pro+ide. ?. Access to Domestic Mar"et: )*A units ha+e unlimited flexi ility to exploit !rowin! domestic demand whereas EOU and SEZ units can ha+e limited access to the domestic markets as they ha+e to e net forei!n exchan!e earners. -<. #t$er Benifits: *he other enefits to SEZ units such as exemption from electricity duty, hassle'free en+ironment, etc ou!ht not to make a hu!e difference in the decision to locate units.