What is DTA?
‘DTA,’ or ‘domestic tariff areas’ are areas or zones that are located outside India’s SEZ and/or EOU. SEZ, or special economic zones, are specific locations wherein businesses typically function with less hassles for foreign investors in terms of taxes, tariffs, and procedural guidelines. EOU’s, or Export Oriented Units, meanwhile, are created similarly to SEZs but are not confined to specific geographic regions. Activities involved with units under the SEZ or EOU programs are subject to the guidelines of the Customs Department. Any area or zone beyond the EOU and SEZ in India is called ‘domestic tariff area or zone’ and is not bound by customs.
DTAs are set up to increase the efficiency of India’s special economic zones. These zones are basically designed to boost the country’s economy through the exportation of goods and/or services. Through special economic zones, more investments are expected to come in, and this will eventually result in greater employment opportunities. With all the profit gained from creating these special economic zones, more funding may be given to various infrastructure projects in India. As with the DTA, units also enjoy various incentives including tax-free transactions within SEZ in the form of supplies. Supplies that come into a declared special economic zone from a domestic tariff area, though, are subject to various guidelines. One basic guideline is that supplies from DTAs, for example, can only be used in any SEZ for its authorized purpose only. Beyond the proper authorization, taxes may be charged or imposed.
And in cases where the products from any DTA become unused by a certain unit in the SEZ, this particular unit is allowed by law to put them as an export or sell them to other units within their zone. This disposal method is considered an authorized activity and does not involve payment of duties and taxes. Also under India’s economic rules it allows units in special economic zones to dispose of waste products to domestic tariff zones, but this time with corresponding customs fees.