In order to get 100% exemption of Income tax for SEZ unit the company should have generated entire profit from SEZ unit. Sec 10AA(7) of the Income Tax Act allows the tax exemption in the ratio of profit from SEZ operations and profit from other operations. Therefore its advisable to create a separate company for SEZ operations. A company with SEZ operations might be a Subsidieary of an existing company with non SEZ operations.
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