The Export Promotion Council for export oriented units and Special Economic Zones (EPCES) has opposed a proposal being considered by the finance ministry for abolition of all direct tax benefits for SEZs not operationalised before April, 2017.

Noting that such proposal was being considered by the Central Board of Direct Taxes (CBDT) in the finance ministry, Rahul Gupta, Vice-Chairman, EPCES, said it would create uncertainty in the minds of investors, SEZ developers and units, and lead to an increase in the number of applications for de-notification of approved SEZs.

Following the implementation of Minimum Alternate Tax and Dividend Distribution Tax, imposed by the previous UPA government in the FY12 Budget, there is already a slowdown in SEZ sector in terms of growth in exports from these enclaves, reduced number of SEZ notifications, slower operationalisation of SEZs and increased number of applications for de-notification of approved SEZs, Mr. Gupta said. If the proposal for abolition of direct tax benefits for SEZs not operationalized before April, 2017 is also implemented, it will further dent the investor friendly image of SEZs, he said. SEZ Act was enacted to provide long term stability and continuity to the SEZ Scheme, he added.

Despite various representations from the SEZ community, the government has neither withdrawn MAT and DDT, nor reduced the rates of MAT so far and the matter is still pending with the ministry, Gupta said.