As many as 15 developers, including Essar, Bengal Shapoorji, K Raheja Universal and Satyam Computer Services may pull out of their Special Economic Zones (SEZ) projects, following withdrawal of tax exemptions, an industry body said today.
More developers may withdraw their SEZ projects, as they lose tax-free status with imposition of minimum alternate tax (MAT)and further burden through direct tax code, Export Promotion Council for Export-oriented Units and and SEZs said in a statement here.
"Many more SEZs which are yet to commence commercial activities may withdraw from the scheme,as they are now put on par with any DTA [domestic tariff area] sector which enjoys more operational freedom," the council said.
It said on top of 18% MAT, additional tax burden of 15% would be levied on them when the Direct Tax Code comes into operation.
Out of 584 formally approved SEZs, 378 have been notified, while 133 have become operational.
Exports of Rs 3,15,868 crore out of the functional SEZs have shown 43% growth, while total employment of 6.76 people has been created.
"Potential of higher exports, accelerated employment generation and investment the from balance 451 SEZs would be of much higher magnitude," the council said.
It said while the manufacturing sector,in general, has shown considerable decline, the industrial activity in SEZs has displayed commendable growth.
"The growth can be attributed to the tax concessions and administrative support given in the SEZ policy," it said.
However, with the MAT and the proposed burden in the DTC, the government is going back on its commitments which would "result into lack of credibility in the minds of investors", it said.