Commerce secretary to meet SEZ developers on December 10 to discuss tax issues
December, 09th 2015
Commerce secretary Rita Teaotia will meet special economic zones (SEZs) developers on December 10 to discuss tax issues of these enclaves.
The meeting has been called in the backdrop of slowing growth in SEZ exports, reduced number of SEZ notifications, slower operationalization and increased de-notification applications.
As per the Export Promotion Council for EOUs and SEZs (EPCES), the commerce department is in the process of identifying the reasons for this slowdown in the SEZs.
"Apart from the removal of MAT from SEZ, we will also take up the issue of removal of direct tax benefits under the roadmap to phase out tax exemptions," said an official.
Last month, the Central Board of Direct Taxes had issued a roadmap to phase out tax exemptions in lieu of reducing corporate tax from 30% to 25%. Under this roadmap, it is considering a proposal for abolition of all direct tax Benefits for SEZs not operationalized before April, 2017.
SEZs have been hit due the direct taxes of MAT and dividend distribution tax - which were imposed in 2011. SEZs contribute to about a quarter of the country's total exports but started seeing a spree of denotifications after these two taxes were put in place.
Exports from SEZs declined to Rs 4.63 lakh crore in 2014-15 from Rs 4.94 lakh crore in 2013-14
In addition to implementation of MAT/DDT on SEZs, in case, this proposal for abolition of all direct tax benefits for SEZs not operationalized before April, 2017 is also implemented, this will further dent the investor friendly image of SEZs, create uncertainty in the minds of foreign and domestic investors, SEZ Developers and SEZ Units in the country, loss of valuable foreign exchange for the country and will send wrong signals to the international investment community which is looking at Indi ..