The Centre has permitted dual use of non-processing areas in special economic zones, allowing developers to set up social infrastructure such as schools, hospitals and hotels, which can be accessed by people from within and outside these conclaves.

Allowing dual use of infrastructure in non-processing zones means developers will be allowed to use the infrastructure to cater to people living outside the zones, subject to payment of applicable taxes.

New notification A notification in this regard was issued by the Department of Commerce on January 2, amending the SEZ rules.

According to the notification, there will be no exemptions, concessions or drawback for creation of infrastructure in non-processing areas. “The customs duty, Central excise duty, service tax, and such other Central levies and tax benefits already availed for creation of such infrastructure shall be refunded by the developer in full, without interest,” it said.

In cases of short payment of the amount refundable to the Government on account of dual-use permission, the interest will have to be paid at the rate of 15 per cent a year from the day the amount becomes payable to the date of actual payment.

Also, use of SEZ land shall be subject to regulations of the State Government or local bodies concerned.

In a written reply to the Rajya Sabha in the Winter Session, Commerce Minister Nirmala Sitharaman said: “The government … is presently engaged in inter-ministerial consultations for finalisation of a proposal to make dual utilisation of facilities in the non-processing area of SEZs by both SEZ as well as DTA (domestic tariff area) entities”.

Under dual use, not more than 25 per cent of the non-processing area can be used for housing, not more than 10 per cent for commercial use, and not less than 40 per cent as open area and circulation. The rest is for social and institutional infrastructure such as schools, colleges, banks, a post office etc.

Further, no sale will be permitted of “such duty paid” dual-use infrastructure in the non-processing area and only lease-hold rights can devolve upon the users of such infrastructure.

Attracting investments Industry has for long demanded that the government permit use of social or commercial infrastructure in SEZs by people outside such zones.

The move will help SEZ developers attract investments and make it more viable for them to invest in such infrastructure in non-processing areas.

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