Economic, Commercial and Intellectual Property Laws · Law relating to Special Economic Zones

Section 49 SEZ Act: Power to Modify Provisions and Other Laws

Updated 11 October 2026 · Fact-checked

Under section 49 of the SEZ Act, 2005, the Central Government may notify that any provision of the Act (except sections 54 to 56) or of another Central Act does not apply to SEZs, or applies with changes. Labour-related matters are protected by a proviso, and the draft must be laid before Parliament for thirty days.

Understand Power to Modify Provisions and Other Laws in SEZ

An SEZ is meant to work as a simplified, business-friendly area. But many Central laws were written for the rest of India. If every one of them applied in full inside a zone, the zone would lose its purpose.

Section 49 solves this. It gives the Central Government a power to switch off, or adapt, laws for SEZs by notification. The notification can cover one SEZ, a class of SEZs, or all SEZs.

The power has two forms. Under clause (a), a specified provision shall not apply to the SEZ or SEZs. Under clause (b), it shall apply only with exceptions, modification and adaptation that the notification specifies. The provisions can be from the SEZ Act itself (other than sections 54 to 56), or from any other Central Act, rules, regulations, notifications, orders or directions made under it. Provisions relating to the making of rules or regulations are left out.

The power has limits. First, the proviso says section 49 does not extend to modifications relating to trade unions, industrial and labour disputes, welfare of labour including conditions of work, provident funds, employers' liability, workmen's compensation, invalidity and old age pensions and maternity benefits. Second, under sub-section (2), a copy of every notification proposed to be issued is laid in draft before each House of Parliament for a total of thirty days. If both Houses disapprove or agree to modify it before the end of the session immediately following, it is not issued, or is issued only in the modified form.

Read section 49 with the neighbouring sections. Section 50 lets the State Government notify policies and take steps for laws granting exemption from State taxes, levies and duties to Developers and entrepreneurs, and delegating State-law powers to the Development Commissioner. Section 26 gives the statutory exemptions, and section 27 applies the Income-tax Act with modifications in the Second Schedule.

Key rules to remember

Power under section 49(1): Central Government + notification → specified provision (a) shall not apply, or (b) applies with exceptions, modification and adaptation; Can be for one SEZ, a class of SEZs or all SEZs.
Excluded from the power: Sections 54 to 56 of the SEZ Act cannot be switched off or modified; nor can provisions relating to making of rules or regulations; Do not say the whole Act can be modified.
Labour proviso: No modification on: trade unions, industrial and labour disputes, labour welfare including conditions of work, provident funds, employers' liability, workmen's compensation, invalidity and old age pensions, maternity benefits; Learn the list as a group; examiners often test it.
Parliamentary control, section 49(2): Draft laid before each House for 30 days in total (one or more successive sessions); both Houses disapprove or modify before the end of the next session → not issued, or issued as modified; It is a draft laid before issue, not a notification laid after issue.
State power, section 50: State Government notifies policies and takes steps for law: (a) exemption from State taxes, levies and duties; (b) delegation of State-Act powers to Development Commissioner; Applies to the Developer or entrepreneur.
Income-tax link, section 27: Income-tax Act applies to Developer or entrepreneur for authorised operations, subject to modifications in the Second Schedule; The Act text refers to the Income-tax Act, 1961; mention this when quoting the section.

How to solve Power to Modify Provisions and Other Laws in SEZ questions

Use this method for any question on the Centre's power to modify laws in SEZs.

1Identify the source of the power: section 49 of the SEZ Act, 2005, exercised by the Central Government by notification.
2State the two forms: non-application (clause a) or application with exceptions, modification and adaptation (clause b).
3Check the subject-matter: is the provision from the SEZ Act (not sections 54 to 56) or another Central Act, rules or notifications? Rule-making provisions are excluded.
4Test the labour proviso: if the matter concerns trade unions, labour disputes, labour welfare, provident funds and the like, the power does not extend to it.
5Check the procedure: the draft must be laid before both Houses for thirty days, and can be stopped or modified by both Houses agreeing.
6If State laws or taxes are involved, switch to section 50: the State Government acts, not the Centre.
7Write a clear conclusion that applies the rule to the facts.

Quickest way: Who, what, limit, control

When to use it: Short-answer or case-type questions where time is tight.

Who: Central Government, by notification.
What: non-application or modification of Central Act provisions for SEZs.
Limit: not sections 54 to 56, not rule-making provisions, not the labour matters in the proviso.
Control: draft laid before Parliament for thirty days.
Add one line on section 50 if State taxes or State laws are mentioned.

Common mistakes in Power to Modify Provisions and Other Laws in SEZ

Saying the Central Government can modify any law, including labour laws, for SEZs.
Students remember the wide power but skip the proviso.
Fix: Always add the proviso: trade unions, industrial and labour disputes, labour welfare, provident funds and related matters are outside the power.
Saying the power covers the entire SEZ Act.
The words 'any of the provision of this Act' seem to include everything.
Fix: Remember the bracket: other than sections 54 to 56.
Giving the power to the State Government or the Board of Approval.
Confusion with section 50 and the approval authorities.
Fix: Section 49 is the Central Government; section 50 is the State Government and deals with State taxes and State-Act powers.
Saying the notification is laid before Parliament after it is issued.
Students mix this with ordinary delegated legislation.
Fix: Section 49(2) says a copy of the notification proposed to be issued is laid in draft for a total of thirty days.
Thinking the notification can apply only to all SEZs together.
Students ignore the options in clauses (a) and (b).
Fix: It can cover a single SEZ, a class of SEZs or all SEZs.
Confusing section 49 with section 26 exemptions.
Both relate to relief for SEZ entities.
Fix: Section 26 gives specific statutory exemptions to Developers and entrepreneurs; section 49 is a general power to disapply or adapt laws.

Worked examples

Example 1

The Central Government proposes to notify that certain provisions of a Central Act shall not apply to all SEZs, and also that provisions on provident fund contributions shall apply to SEZs with relaxed conditions. Examine the validity of each proposal under the SEZ Act, 2005.

Show the solution

Provision: section 49(1) lets the Central Government, by notification, direct that provisions of the SEZ Act (other than sections 54 to 56) or any other Central Act shall not apply, or apply with modifications, to one, a class of, or all SEZs.
First proposal: non-application of a Central Act provision to all SEZs falls within clause (a). It is valid if it is not a rule-making provision and the procedure in section 49(2) is followed.
Second proposal: the proviso bars modifications relating to matters including provident funds and welfare of labour. Relaxing provident fund conditions in SEZs is therefore outside the power.
Procedure: the first notification must be laid in draft before each House for thirty days in total.
Conclusion.

Answer: The first proposal is valid under section 49(1)(a), subject to laying the draft before Parliament. The second is not permitted because the proviso to section 49(1) excludes modifications relating to provident funds.

Example 2

A draft notification under section 49 was laid before both Houses of Parliament. Before the end of the session immediately following the period of thirty days, both Houses agree to modify it. What is the result?

Show the solution

Provision: section 49(2) requires a copy of the proposed notification to be laid in draft for a total period of thirty days, in one session or successive sessions.
Condition: the Houses act before the expiry of the session immediately following the session or successive sessions in which the draft was laid.
Where both Houses agree in making a modification, the notification shall be issued only in the modified form agreed upon by both Houses.
If both Houses had agreed in disapproving it, the notification would not have been issued at all.
Conclusion.

Answer: The notification can be issued only in the modified form agreed by both Houses.

Exam tips

Write the provision first: section 49, SEZ Act, 2005, Central Government, by notification. Then facts, then conclusion.
Learn the labour proviso list word by word; it is a favourite point for a short note.
Always mention the exclusion of sections 54 to 56.
Contrast section 49 (Centre, general disapplication or adaptation) with section 50 (State, taxes and delegation) in one or two lines.
Cite section numbers only for the ones you know: 49, 50, 26 and 27 are safe from the text.

Practice questions from Law relating to Special Economic Zones

Power to Modify Provisions and Other Laws in SEZ in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Power to Modify Provisions and Other Laws in SEZ: frequently asked questions

Who can modify other laws for SEZs under section 49?

Only the Central Government, and only by notification. The notification can name a single SEZ, a class of SEZs or all SEZs.

Can labour laws be modified for SEZs under section 49?

No. The proviso keeps matters such as trade unions, industrial and labour disputes, labour welfare, provident funds, employers' liability, workmen's compensation, pensions and maternity benefits outside the power.

Does Parliament have a say in a section 49 notification?

Yes. A draft must be laid before each House for thirty days in total. If both Houses agree to disapprove it, it is not issued; if both agree to modify it, it is issued as modified.

What does section 50 add to section 49?

Section 50 lets the State Government notify policies and take steps for laws granting exemption from State taxes, levies and duties to Developers and entrepreneurs. It also allows delegating State-Act powers to the Development Commissioner.

How does section 27 relate to this topic?

Section 27 applies the Income-tax Act to Developers and entrepreneurs for authorised operations, subject to the modifications in the Second Schedule. It is a specific example of another law applying in an SEZ with changes.