Why SEZ law applies, and who administers it
Section 18 of the SEZ Act allows an IFSC to be set up only in an SEZ. IFSCA's SEZ Compliance FAQs (March 2025) therefore treat every unit approved, licensed, registered or authorised by IFSCA as an SEZ unit. Under section 12(7) of the SEZ Act, the Development Commissioner's powers over IFSC units are vested in the Administrator (IFSCA), so one authority handles both the IFSCA and SEZ tracks. Approvals go to the Unit Approval Committee (UAC), which normally meets weekly in hybrid mode. IFSCA has also published SEZ compliance FAQs and held open-house sessions on SEZ compliance in March 2026.
Every unit operates under a Letter of Approval (LOA) limited to specified authorised operations, and must provide only those services.
From Letter of Approval to commencement
- Bond-cum-Legal Undertaking: executed in Form-H under rule 22, with a bond value calculation sheet, and approved jointly by the Specified Officer of Customs and the Administrator (IFSCA).
- Lease deed: a registered copy must reach the Administrator within six months of the LOA (rule 18(2)). If it does not, the UAC may withdraw the LOA after a hearing; delay can be condoned on request.
- Commencement: the LOA is valid for one year, within which the unit must start operations (rule 19(4)). The Administrator may extend it by up to two further years for reasons recorded in writing, on an application made at least one month before expiry. Commencement is usually taken as the first invoice, but is decided case by case for activities such as funds and broker-dealing. It is intimated on SEZ Online with proof, the IFSCA registration and the registered lease.
- Validity: once the Administrator has taken commencement on record (filing the intimation alone is not enough), the LOA runs for five years from commencement.
For the approval stage itself, see SEZ unit approval.
Recurring reports
| Report | Who files | Deadline |
|---|---|---|
| Monthly Performance Report (MPR): employment, investment and similar data | Every unit holding an LOA | Data as on the last day of the month, by the 5th of the following month |
| Service Exports Reporting Form (SERF): summary of the month's invoices | Every unit whose commencement has been taken on record, from the month of commencement | By the 5th of the following month |
| Annual Performance Report (APR) in Form-I, certified by an independent chartered accountant or cost accountant | Every unit whose commencement has been taken on record, for each financial year including the first | Within 180 days after the close of the financial year (Condition 7 of Form-H) |
All three are filed only on SEZ Online. Email or paper copies are not accepted. The Administrator's Public Notice No. 03/2024-25 warns that failure to file the MPR and SERF will be viewed seriously and may lead to penal action. The FAQs state that non-filing may attract monetary penalties.
Changes during the life of the unit
- Reorganisations: under the Ministry of Commerce's Instruction 109 of 18 October 2021, a change of name, shareholding pattern, constitution or directors, a business transfer, or a court-approved merger or demerger needs UAC approval. The request is filed on SEZ Online.
- New activities: adding services beyond the authorised operations needs both IFSCA approval and an amendment (broadbanding) of the LOA.
- Premises: moving, adding or deleting an address is approved through SEZ Online.
- Renewal: the LOA must be renewed every five years by filing Form-F1 with the last five APRs, at least two months before expiry (rules 19(6) to 19(6B)). Late applications need a justification and may attract penalties.
- Exit: a unit that surrenders its LOA follows the exit procedure under rule 74 (see Exit).
How SEZ filings feed regulatory scrutiny
SEZ filings are read alongside IFSCA supervision. In its order of 31 July 2026 against a registered fund management entity, IFSCA records that it examined the entity's SEZ commencement intimation, found discrepancies, sought explanations, and then started proceedings under the Fund Management Regulations that ended in penalties and directions (see Inspections and enforcement). Keep MPR, SERF and APR data consistent with what the entity tells IFSCA in its regulatory returns.