Special Economic Zones — Policy Reforms

Entry	Year	Description	Impact
Finance Act, 2016	2016	Introduced Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) on SEZ units, which were previously exempt. This significantly diluted the fiscal attractiveness of SEZs.	Reduced the net tax benefits for SEZ units, leading to concerns from developers and units about policy stability and impacting investment decisions. It was a major blow to the SEZ ecosystem.
Finance Act, 2020	2020	Phased out the income tax exemption under Section 10AA of the Income Tax Act for new SEZ units that commence operations on or after April 1, 2020.	Marked a significant shift in government policy, signaling a move away from direct tax incentives for new SEZ investments. This was aimed at rationalizing tax exemptions and addressing revenue loss concerns, but it further reduced the attractiveness of establishing new units in SEZs.
SEZ (Amendment) Bill, 2019	2019	Allowed trusts or any entity notified by the Central Government to be eligible to set up an SEZ. Previously, only a company, firm, or cooperative society could establish an SEZ.	Broadened the scope of eligible developers, potentially facilitating more diverse participation in SEZ development and attracting new forms of investment, including from infrastructure trusts and investment funds.