Realty sector unhappy on SEZs being brought under MAT purview

The real estate sector is unhappy at special economic zones (SEZs) being brought under the purview of minimum alternate tax (MAT) in the Budget presented to Parliament today by Union Finance Minister Pranab Mukherjee.

This "basically diminishes the benefits that SEZs offer for developers over other commercial real estate asset classes", Jones Lang LaSalle India Chairman & Country Head Anuj Puri said.

MAT on SEZ developers is advanced by one year, while it was to be implemented under the Direct Taxes Code from April 1, 2012, the advancement of this tax by one year could be a dampener for developers of SEZs.

"This will increase the scepticism in the minds of SEZ developers about the future tax benefits of developing an SEZ," Knight Frank India Vice-Chairman and Managing Director Pranab Datta said.

Leading developer Niranjan Hiranandani said "already some of the SEZs have started closing down and being surrendered. With the imposition of MAT, more will surrender".

According to him, projects where the government has given long-term commitments and where developers and industries have invested money, the tax should not be imposed.

"Imposition of MAT is unfair as it is directly opposite to the stated policy of the government which has encouraged setting up of SEZs. It (tax) could be imposed where new projects are undertaken so that they can be based on the new tax rate," Hiranandani said.