Sharma questions timing of MAT imposition on SEZs

Commerce and Industry Minister Anand Sharma has raised “serious concerns” with the finance ministry over the imposition of Minimum Alternate Tax (MAT) on Special Economic Zone (SEZ) developers and units from April 2012.

Earlier this week, while unveiling the budget for 2011-2012, the FM proposed to charge 18.5 per cent MAT on the book profits of both SEZ developers and companies located inside these, earlier exempted in line with Section 115JB(6) of the Income Tax Act. These would be deducted during the assessment year 2012-13 and thereon.

"I have discussed this and written to the FM. It was a surprise and for the developers, surely it is a matter of concern," Sharma told reporters here on Friday.

He said the government had earlier decided to impose MAT on SEZs with the introduction of the Direct Taxed Code (DTC), expected to be from 2012. "Our understanding has been that we will try to align it (imposition of MAT) with the coming in of the DTC.”

Besides MAT, the FM also proposed to do away with exemption from Dividend Distribution Tax (DDT) for SEZ developers from June. At present, under Section 115-O(6), companies involved in developing, operating and maintaining SEZs are exempted from paying DDT.