UPSC Prelims Practice Questions — Government notifies Conditional Concessional Customs Duty for SEZ to Domestic Tariff Area sales to boost manufacturing capacity

Q1. With reference to the legal basis of the conditional concessional customs duty notified for SEZ-to-DTA clearances, consider the following statements: 1. It was notified under Section 25(1) of the Customs Act, 1962. 2. It was issued by the Central Board of Indirect Taxes and Customs. 3. It was operationalised by amending the Special Economic Zones Act, 2005. 4. The Central Board of Indirect Taxes and Customs functions under the Department of Revenue, Ministry of Finance. Which of the above is/are NOT correct?

  1. It was notified under Section 25(1) of the Customs Act, 1962.
  2. It was issued by the Central Board of Indirect Taxes and Customs.
  3. It was operationalised by amending the Special Economic Zones Act, 2005.
  4. The Central Board of Indirect Taxes and Customs functions under the Department of Revenue, Ministry of Finance.
  • A. 1 and 2
  • B. 2 and 4
  • C. 3 only
  • D. 3 and 4

Q2. Comparing the instrument that granted the concession with the parent SEZ scheme, consider the following statements: 1. The concession was operationalised through a customs notification under the Customs Act, 1962, whereas the SEZ scheme itself is administered under the Special Economic Zones Act, 2005. 2. The notification was issued by the Department of Revenue, whereas the SEZ scheme's parent custodian is the Department of Commerce. 3. Unlike the SEZ Act, which is administered by the Ministry of Finance, the customs notification was issued by the Ministry of Commerce & Industry. Which of the statements given above is/are correct?

  1. The concession was operationalised through a customs notification under the Customs Act, 1962, whereas the SEZ scheme itself is administered under the Special Economic Zones Act, 2005.
  2. The notification was issued by the Department of Revenue, whereas the SEZ scheme's parent custodian is the Department of Commerce.
  3. Unlike the SEZ Act, which is administered by the Ministry of Finance, the customs notification was issued by the Ministry of Commerce & Industry.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q3. Notification No. 11/2026-Customs, which alone operationalised the one-time conditional concessional duty for SEZ-to-DTA clearances, was issued by which one of the following authorities?

  • A. Central Board of Indirect Taxes and Customs, Department of Revenue, Ministry of Finance
  • B. Directorate General of Foreign Trade, Ministry of Commerce & Industry
  • C. Board of Approval, Department of Commerce
  • D. Central Board of Direct Taxes, Department of Revenue

Q4. With reference to Notification No. 11/2026-Customs, consider the following: 1. Statutory power invoked — Section 25(1) of the Customs Act, 1962. 2. Validity window — 1 April 2026 to 31 March 2027. 3. Date of the notification — 31 March 2026. 4. Cap on DTA clearances — 50% of the highest annual FOB export value. Which of the above is/are correctly identified?

  1. Statutory power invoked — Section 25(1) of the Customs Act, 1962.
  2. Validity window — 1 April 2026 to 31 March 2027.
  3. Date of the notification — 31 March 2026.
  4. Cap on DTA clearances — 50% of the highest annual FOB export value.
  • A. 1 and 4 only
  • B. 2 and 3 only
  • C. 1, 2 and 3 only
  • D. 1, 2, 3 and 4

Q5. The Special Economic Zones Act, 2005, together with the SEZ Rules, came into force on which one of the following dates?

  • A. 10 February 2006
  • B. 23 June 2005
  • C. 1 April 2006
  • D. 1 April 2005

Q6. With reference to the framework of the Special Economic Zones Act, 2005, consider the following statements: 1. An SEZ is deemed to be a territory outside the customs territory of India for authorised operations. 2. An SEZ may be set up as a Free Trade and Warehousing Zone. 3. Each SEZ is headed by a Development Commissioner. 4. Supply of goods from the Domestic Tariff Area to an SEZ is treated as an import into the SEZ. Which of the statements given above is/are correct?

  1. An SEZ is deemed to be a territory outside the customs territory of India for authorised operations.
  2. An SEZ may be set up as a Free Trade and Warehousing Zone.
  3. Each SEZ is headed by a Development Commissioner.
  4. Supply of goods from the Domestic Tariff Area to an SEZ is treated as an import into the SEZ.
  • A. 1 and 2 only
  • B. 3 and 4 only
  • C. 1, 2 and 3 only
  • D. 1, 2, 3 and 4

Q7. Comparing the normal customs treatment of SEZ-to-DTA clearances with the newly notified concession, consider the following statements: 1. Normally, clearance of goods from an SEZ into the DTA is treated as an import into India and attracts applicable customs duties. 2. Under the concession, eligible DTA clearances are capped at 30% of the highest annual FOB export value in any of the three immediately preceding financial years. 3. Unlike normal DTA sales, the concessional clearances are additionally eligible for duty drawback on inputs. Which of the statements given above is/are correct?

  1. Normally, clearance of goods from an SEZ into the DTA is treated as an import into India and attracts applicable customs duties.
  2. Under the concession, eligible DTA clearances are capped at 30% of the highest annual FOB export value in any of the three immediately preceding financial years.
  3. Unlike normal DTA sales, the concessional clearances are additionally eligible for duty drawback on inputs.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q8. The administration of the Special Economic Zones scheme, including the policy framework governing clearances of goods into the Domestic Tariff Area, vests primarily in which one of the following?

  • A. Department of Commerce, Ministry of Commerce & Industry
  • B. Department of Revenue, Ministry of Finance
  • C. Department for Promotion of Industry and Internal Trade
  • D. Directorate General of Foreign Trade

Q9. With reference to the eligibility conditions and rationale of the SEZ-to-DTA concession introduced to counter idle capacity, consider the following statements: 1. A minimum value addition of 20% within the SEZ is required for goods cleared into the DTA. 2. The concession is available on a permanent basis to all SEZ units. 3. Eligible units must have commenced production on or before 31 March 2025. 4. The measure is expected to benefit about 1,200 SEZ manufacturing units. Which of the statements given above is/are correct?

  1. A minimum value addition of 20% within the SEZ is required for goods cleared into the DTA.
  2. The concession is available on a permanent basis to all SEZ units.
  3. Eligible units must have commenced production on or before 31 March 2025.
  4. The measure is expected to benefit about 1,200 SEZ manufacturing units.
  • A. 1 and 2 only
  • B. 2 and 4 only
  • C. 1, 3 and 4 only
  • D. 1, 2, 3 and 4

Q10. Regarding the linkage between the Union Budget 2026-27 and the SEZ-to-DTA concession, consider the following statements: 1. The conditional concession for SEZ-to-DTA clearances was announced in the Union Budget 2026-27 and subsequently operationalised through a customs notification. 2. The relaxation of SEZ DTA sales was projected as a means to promote import substitution and domestic job creation. 3. The Budget proposal was implemented by amending the Special Economic Zones Act, 2005 through the Finance Act. Which of the statements given above is/are correct?

  1. The conditional concession for SEZ-to-DTA clearances was announced in the Union Budget 2026-27 and subsequently operationalised through a customs notification.
  2. The relaxation of SEZ DTA sales was projected as a means to promote import substitution and domestic job creation.
  3. The Budget proposal was implemented by amending the Special Economic Zones Act, 2005 through the Finance Act.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q11. With reference to the scope of the SEZ-to-DTA concession and the wider export-promotion framework, consider the following statements: 1. The concession excludes Free Trade Warehousing Zone (FTWZ) units. 2. Under the concession, SEZ units may clear goods to the DTA without any quantitative ceiling. 3. The concession excludes goods merely imported into SEZs and cleared to the DTA without adequate manufacturing. 4. Export Oriented Units (EOUs) are permitted to make DTA sales subject to entitlement limits. Which of the above is/are NOT correct?

  1. The concession excludes Free Trade Warehousing Zone (FTWZ) units.
  2. Under the concession, SEZ units may clear goods to the DTA without any quantitative ceiling.
  3. The concession excludes goods merely imported into SEZs and cleared to the DTA without adequate manufacturing.
  4. Export Oriented Units (EOUs) are permitted to make DTA sales subject to entitlement limits.
  • A. 1 and 3
  • B. 2 only
  • C. 2 and 4
  • D. 4 only

Q12. With reference to the institutional architecture governing SEZs and the concessional-duty measure, consider the following statements: 1. The Central Board of Indirect Taxes and Customs, which issued the notification, functions under the Department of Revenue, Ministry of Finance. 2. The parent custodian of the SEZ scheme is the Department of Commerce under the Ministry of Commerce & Industry. 3. Each SEZ is administratively headed by a Development Commissioner under the Department of Commerce. 4. The Board of Approval for SEZs functions under the Central Board of Indirect Taxes and Customs. Which of the above is/are NOT correct?

  1. The Central Board of Indirect Taxes and Customs, which issued the notification, functions under the Department of Revenue, Ministry of Finance.
  2. The parent custodian of the SEZ scheme is the Department of Commerce under the Ministry of Commerce & Industry.
  3. Each SEZ is administratively headed by a Development Commissioner under the Department of Commerce.
  4. The Board of Approval for SEZs functions under the Central Board of Indirect Taxes and Customs.
  • A. 1 and 2
  • B. 2 and 3
  • C. 4 only
  • D. 1 and 4