SEZs had lost attraction after the imposition of certain levies that took away tax incentives
The government is likely to announce new norms by the end of next month to revive special economic zones (SEZs), which have lost attraction after the imposition of certain levies that took away tax incentives.
“In a month’s time, that is by January end, you can expect the revised or the new SEZ guidelines which will definitely be a positive mood booster for investors,” said Minister for Commerce & industry, Anand Sharma.
The government had imposed Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) on SEZs in 2010-11, which were earlier exempted from almost all levies. Due to imposition of these levies, there has been a slowdown in growth of export from SEZs.
“I had personal reservations when the decision to bring in MAT was announced. We had urged a reconsideration because it was meant to align with the Direct Taxes Code (DTC). But that did not happen,” Sharma said.
He added the levies should not had been imposed as the predictability of a policy regime was essential to assure investors, both domestic and foreign, that when they invesedt money under the government policy, which had the endorsement of Parliament, there would be stability.
The DTC, being considered by Parliament, proposes to do away with the income tax exemption given to SEZs and instead link tax sops to investments made in them. Profit-linked benefits were the main attraction of the SEZ scheme.
According to sources, the government is considering to relax minimum land area requirement for different categories of SEZ, besides extending the benefits of export schemes to SEZ units that are already available to entities outside the zone. Exports from special economic zones (SEZs) grew by 36 per cent year-on-year to Rs 2,39,000 crore between the months of April and September this financial year.