Sharma allays fears on SEZ tax sops

Commerce and Industry Minister Anand Sharma today said that he has conveyed investor concerns over the proposed withdrawal of fiscal benefits to Special Economic Zones (SEZs) to Prime Minister Manmohan Singh and assured the industry of protecting the exemptions.

"We have discussed this with the Finance Minister and also with the Prime Minister...I would like to assure (you) that we will protect the benefits which the investors were to get in the SEZs," Sharma told the gathering of industrialists and exporters while releasing the Foreign Trade Policy review here.

The revised discussion paper on the Direct Tax Code (DTC), which would overhaul the Income Tax Act, proposes tax exemptions only for the existing SEZ units.

The proposal has unnerved developers of the SEZs.

Sharma agreed that there should be a stability in the policy for the promoters and the developers of the tax free enclaves.

"The Finance Minister is fully sensitive to our concerns and also the apprehensions of the investors and the industry.. .I am sure that these issues will get addressed when the final version of the DTC goes to Parliament," he said.

An SEZ unit gets 100 per cent Income Tax exemption for the first five years, 50 per cent for the next five years and thereafter 50 per cent of the ploughed back export profit for five years.

The minister said that the SEZs have lived up to the promise of attracting investments and generating employment.

In 2009-10, exports from these zones aggregated Rs 2.20 lakh crore and they provided direct employment to 5.5 lakh persons.