Commerce Ministry asks for restoration of tax benefits to SEZs

The Commerce Ministry has asked for restoration of the tax benefits for special economic zones to revive them, Parliament was informed today.

"Ministry of Commerce and Industry (Department of Commerce) has recommended the restoration of original exemption from MAT and Dividend Distribution Tax (DDT) to SEZ developers and units," Commerce and Industry Minister Nirmala Sitharaman said in a written reply to the Rajya Sabha.

The industry has been complaining that Minimum Alternate Tax and the DDT on SEZs have dented the investor sentiment.

As per the original provisions of the Special Economic Zones Act, 2005 and Rules, 2006, SEZ developers and units were exempted from MAT.

SEZs, which are major export hubs, contribute about one-third to the country's total exports. They provide employment to about 15 lakh persons.

Government had imposed 18.5% MAT on the book profits of special economic zone developers and units.

Of the 566 formally approved SEZs, only 185 are in operation. Exports from these zones increased from Rs 22,840 crore in 2005-06 to Rs 4.94 lakh crore in 2013-14.