SEZ – Separate company vs sub-unit

While setting up a business unit in SEZ, one of the most important choices is to decide whether to register a new company or show it as a unit in one of the existing companies.

One of the deciding factor a is Section 10AA (7) of the Income Tax Act, 1961. It allows profit exemption equal to the proportion of SEZ turnover. Therefore, the actual share of profit from SEZ unit in total profit can help you in taking the decision.

% of SEZ profit > % of SEZ turnover = new company

% of SEZ profit < % of SEZ turnover = same company

Where

% of SEZ profit = SEZ profit / total profit

% of SEZ turnover = SEZ turnover / total turnover

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