SEZ units unlikely to get MAT relief in upcoming Budget

The Dollar Business Bureau

SEZ (special economic zone) units and developers are not likely to get respite from the minimum alternate tax (MAT) in the upcoming Union Budget though the Min of Comm has been strongly pitching for its exclusion official sources said on Wednesday.

The revival of SEZ units, which were once engines of growth for exports, were among the major steps recommended last year by the Board of Trade (BoT), chaired by the Commerce and Industry Minister Nirmala Sitharaman, in order to help reverse the sluggishness in India’s exports. The Board could once more suggest measures to boost SEZs in its meeting later this month, an official said.

Presently, MAT is imposed at a rate of 18.5% on a firm’s book profit, with the actual rate of more than 21%, including the surcharges and cess.

In fact, Ministry of Commerce has been continuously demanding the removal of MAT and DDT (dividend distribution tax) on SEZ developers in the last few years citing that the exemption from tax will enhance export competitiveness at the time when there is a slowdown in the global markets. However, Ministry of Finance is still reluctant to offer any relief, due to fear of revenue losses.

Before MAT and DDT were levied in FY2011-12, exports growth from SEZs was recorded as high as 121% in 2009-10 and 43% in 2010-11, far ahead the growth in the country’s total exports of goods for these fiscals. After dropping nearly 11% in 2014-15, the exports from SEZs declined 3.3% in the last financial year.