Understanding Labor Cess Exemption in Gujarat's SEZ: Is It Similar to Karnataka?

Exemption of Labor Cess in SEZ in Gujarat

Is labor cess exempted in SEZ in Gujarat? As per Section 21 of the SEZ Act, all state taxes, fees, cess, etc., are exempted.

In Karnataka, the state government has exempted the Labor Cess (Refer to attachment Page 12, Point d).

Further, as per Rule 5 (5) of Chapter II of the SEZ Rules 2006 regarding the procedure for the establishment of SEZ, the State Government has also been directed to ensure that the following are made available in the State for the proposed SEZ units and developers before recommending any proposal for SEZ to the Government of India for approval:

- Exemption from the state and local taxes, levies, and duties, including stamp duty, and taxes levied by local bodies on goods required for authorized operations by a unit or developer, and the goods sold by a unit in the domestic tariff area, except the goods procured from the domestic tariff area and sold as it is.

In view of the above, there should be an exemption for the payment of Labor Cess in SEZ in Gujarat as well. We need the details of the same.

Exemption of BOCW Cess in SEZs

Establishments in SEZs are not exempted from the BOCW Cess. The State Government has no power to grant such an exemption. Only the Central Government can grant an exemption under Section 6 of the BOCW Welfare Cess Act, 1996.

Regards,
jpratap

Exemption of Labor Cess in SEZs of Gujarat

Labor Cess is not applicable in SEZs of Gujarat state. The view of revered J. Partap is clarified that the SEZ Act is a central act, and the Gujarat SEZ Act also exempts fees, levies, and duties from payment. Building and Other Construction Workers (BOCW) Cess is a levy as per the Honorable Supreme Court judgment and is exempted from the Cess. It is a practical experience as many companies' units are in SEZ Gujarat and are exempted from BOCW Cess.

Section 6 of the BOCW Cess Act

Section 6 of the BOCW Cess Act talks about units in places other than SEZs for which the Central government's permission is required, that too if the establishment is paying the amount in another form for the welfare of building and other construction workers and not otherwise.