Govt assures SEZs, says issues to be resolved soon

Imposition of DDT/MAT on SEZs has damaged investor –friendly image of the SEZs among the foreign and domestic investors The Dollar Business Bureau 

Central Board of Direct Taxes (CBDT) is considering EPCES’ proposals of terminating all Direct Tax Benefits for SEZs

  The government on Friday assured the Special Economic Zones (SEZs) sector to resolve all paramount issues including DDT/MAT, which have adversely affected the SEZ’s growth and dented the investors-friendly image of the sector. On Friday, Export Promotion Council for EOUs and SEZs (EPCES) met Commerce Minister Nirmala Sitharaman to discuss and resolve key issues related to EOUs and SEZs.  The delegation, led by EPCES Chairman P C Nambiar, stressed that dividend distribution tax (DDT) and minimum alternate tax (MAT) imposed on SEZs have damaged the pro-investor image of the SEZs among the foreign and domestic investors. It has also affected SEZs’ growth, investments, exports and employment, besides bringing down the country’s foreign exchange reserves. “Commerce Minister Nirmala Sitharaman assured the delegation to look into the matter raised by them regarding preferential rates of FTAs (Free Trade Agreements) to import from SEZs by DTA (Domestic Tariff Area) importer use of land in non-processing area, and dual use of land in non-processing area,” Ministry of Commerce said in a statement.  Nambiar also requested the government to totally withdraw MAT or at least reduce it to its original rate of 7.5%.   Responding to the recommendations, Sitharaman said the government is already working towards identifying the paramount reasons for the slowdown in the SEZs. Sitharaman assured that the matter has already been taken with the Finance Minister, and expect some concrete development to be undertaken soon. Referring to the proposals of terminating Direct Tax Benefits for SEZs, Nambiar said the Central Board of Direct Taxes (CBDT) is contemplating it. “In case, this proposal for abolition of all Direct Tax Benefits for SEZs is not operationalised before April 2017, it will further dent the investor-friendly image of SEZs and weaken the SEZ scheme further,” the ministry said. The SEZ body also requested Sitharaman to extend the Sunset clause on SEZs till 2023. She, in turn, informed that the issue has already been raised with the Finance Minister Arun Jaitely. The EPCES delegation consisted of representatives from Adani Port & SEZ, Reliance Industries Jamnagar SEZ, Tata Steel SEZ, Serum Institute of India Ltd., P.P. Jewellers, DLF Ltd., Phoenix Infocity, J. Matadee Free Trade Zone and the ION Kharadi – Panchshil Group.  

February 20, 2016 | 04:40pm IST