In early July 2026, the Central Board of Indirect Taxes & Customs (CBIC) issued a clarification on the treatment of assets transferred out of Special Economic Zones (SEZs) to the Domestic Tariff Area (DTA) or upon unit divestment. The ruling clarifies that certain asset transfers now trigger deemed import duty at exit, recalculated on current valuations rather than historical cost.
For SEZ units planning exit, restructuring, or sale—particularly in electronics, textiles and engineering components—this changes your tax base and working-capital requirement at the transaction date. Promoters and CFOs must re-model divestment IRRs before committing to exit or M&A timelines.
Market signals
CBIC's July 2026 ruling treats the physical transfer of capitalised assets from SEZ to DTA (or to a buyer outside the zone) as a deemed import under Section 3 of the Customs Act, 1962. The duty is computed not on the original cost but on the fair market value (FMV) of the asset on the date of transfer. For a machinery costing ₹50 lakh acquired in 2022 and now valued at ₹85 lakh, basic customs duty (typically 10–15% across engineering goods) is now levied on ₹85 lakh, not ₹50 lakh. This creates a surprise cash outflow at exit—₹8.5–12.75 lakh in this example—that was not previously modelled into unit economics or M&A deal structures.
The exit-point duty liability must be settled before asset transfer clears customs. This is separate from income-tax capital gains on the asset sale. A unit selling machinery with a ₹30 lakh capital gain will also owe ₹8–12 lakh in customs duty on the same asset within 30–60 days of notice. Many SEZ units lack liquidity to settle both simultaneously, leading to blocked buyer settlements and delayed completion. Additionally, if the buyer is in the DTA, they cannot claim ITC (Input Tax Credit) on the GST embedded in the duty payment, effectively locking 18% more cost into the transaction.
SEZ units with outstanding NFE (Net Foreign Exchange Earnings) obligations under Board of Approval (BoA) conditions face additional scrutiny at exit. The CBIC clarification requires SEZ Development Commissioners to verify NFE compliance before issuing a no-objection to the customs authority for asset transfer. If a unit has missed its annual NFE target (typically 85–100% of investment commitment depending on sector), the SDC may withhold clearance for 90–180 days pending a revised settlement plan. This effectively delays exit closures; promoters planning 2026–2027 unit sales must reconcile NFE position by September 2026 to clear by year-end.
This ruling resets the arithmetic for SEZ unit restructuring, M&A, and closure. Under Section 65 of the SEZ Act, 2005, units have the right to exit, but they must discharge all statutory liabilities—including this newly clarified customs duty—before asset transfer. The implication is that SEZ units can no longer assume duty-free asset transfer on closure; advisors must now model FMV-based duty at transaction date and factor it into IRR, buyer negotiations, and working-capital forecasts. Vinayakam Consultants advises SEZ-backed clients on three immediate steps: (1) obtain a current FMV
Frequently asked questions
The CBIC clarified that asset transfers from SEZs to the Domestic Tariff Area trigger deemed import duty calculated on fair market value (FMV) at exit date, not historical cost. This creates an unexpected cash liability before asset transfer clears customs.
Customs duty is now levied on the asset's FMV on transfer date, not original acquisition cost. For example, machinery costing ₹50 lakh but valued at ₹85 lakh incurs duty on ₹85 lakh, creating a ₹8.5–12.75 lakh additional outflow at exit.
Promoters and CFOs must recalculate divestment IRRs by accounting for deemed import duty liability (separate from capital gains tax) and ensure liquidity to settle both obligations within 30–60 days of customs notice before restructuring or sale timelines.