ComMin calls for lifting MAT, DDT on SEZs to boost exports

The Commerce Ministry today called for removal of minimum alternate tax and dividend distribution tax on SEZs to revive them and boost exports.
Giving a presentation at the Board of Trade meeting, Joint Secretary in the Commerce Ministry Guruprasad Mohapatra said that policy interventions are still required to promote investments and boost exports from these special economic zones (SEZ).
He also called for optimum utilisation of capacity by permitting SEZ units to perform job work for domestic tariff area units and allowing SEZ units to sell products in the domestic markets at free trade agreement duty rates.
He said that the sunset clause for SEZs will lead to the eventual closure of these zones and it is not desirable.

The ministry wants that tax incentives being enjoyed by SEZs should not be abolished. In the Budget, the Finance Minister said that the income tax benefits benefit new SEZ units will be available to those units which commence activity before March 31, 2020.
Talking about the duty forgone, Mohapatra said that it is a "myth".

"Total tax benefits availed by SEZs in 2014-15 amounts to Rs 358 crore in income tax, Rs 8,424 crore in indirect tax, while SEZs exported Rs 4.63 lakh crore. It is worldwide accepted practice that tax should not be exported. Even domestic tariff area units enjoy tax benefits in the course of exports, hence the duty foregone is a myth," he said.

When asked about minimum alternate tax (MAT) and dividend distribution tax (DDT), Commerce and Industry Minister Nirmala Sitharaman said: ""MAT and DDT being where they are, I still would want to work on SEZ so that it is better utilized. If it is (removal of these taxes) in the mind of the industry , it will be in the mind of commerce ministry also".
The government had sacrificed Rs 77,694.37 crore revenue between 2012-13 and 2014-15 for promoting special economic zones, which are export hubs.
Exports from such zones in 2014-15 stood at Rs 4,63,770 crore as compared to Rs 4,94,077 crore.

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Raising the issue of SEZ, Biocon CMD Kiran Mazumdar-Shaw said that there are some obstacles which need to be removed such as matters related to power.
"The sunset clause that we are talking about in 2020 should also apply to developers because you need that investment going into SEZs," she said.