Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: form 3cd :: list of goods taxed at 4% :: empanelment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: due date for vat payment :: VAT RATES :: VAT Audit :: cpt :: ACCOUNTING STANDARDS :: TDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: articles on VAT and GST in India :: TAX RATES - GOODS TAXABLE @ 4% :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARD
 
 
General »
 How young earners can claim HRA tax exemption with ease
 IT firms eye change in foreign tax credit rule
 The most thrilling idea before every Budget: No income tax
 Finance Ministry likely to tweak Minimum Alternate Tax norms to boost industry
 Income tax department warns people to keep away from benami transactions
 New helpline for income tax e-filing
 The Central Government notifies the Companies (Amendment) Act, 2017
 GST Returns: Government Relaxes Rectification Norms
 Will govt bring change in income tax slab? here's the present structure
 No income tax exemption to cooperative banks
 Bitcoin investors may have to pay capital gains tax

MAT leaves SEZs with fewer benefits than outside areas
March, 18th 2011

The imposition of minimum alternate tax (MAT) on special economic zones could make them unattractive for exporters as incentives available outside will outweigh the tax benefits offered by an SEZ, according to experts.

The Budget for 2011-12 has proposed to levy 18.5% MAT on the book profits of units operating in SEZs.

Exporters in the domestic tariff area, or places outside the SEZs, are offered several incentives under the foreign trade policy, such as the freedom to set up the unit anywhere and no obligation to be net foreign exchange earners.

" SEZ units have been enjoying the advantage of zero-tax liability for five straight years and were thus prepared to give up benefits of export promotion schemes, which vary between 3% and 5% of the export value," said Ajay Sahai, director general, Federation of Indian Export Organisations .

Once the tax-free status goes, equations change completely, he added.

For instance, if there is a unit that earns 10% profit, then it would earn Rs 10 on a turnover of Rs 100. If the unit is outside an SEZ, it would have to pay a tax of 33.5% on profit, which would amount to Rs 3.5. But it would also get a minimum 3% incentive that would amount to Rs 3.

The same unit in an SEZ will have to pay Rs 1.85 as tax under the new MAT dispensation and will not gain any export incentive.

"Although exporters can take credit for minimum alternate tax, SEZ units exporting 100% of their production cannot adjust it in the first five years of operation as they would have no tax liability to set it off against," said SEZ consultant Hitender Mehta.

Under the SEZ Act, units get 100% tax exemption on profits earned for the first five years, a 50% exemption for the next five years and another 50% exemption on re-invested profits in the following five years.

With India signing free-trade agreements with several countries allowing imports on concessional duties, there is an additional disadvantage for SEZ units.

"While those operating outside SEZs can import inputs at concessional rates, units in SEZs have to pay full customs duties," said R K Sonthalia, former president of export promotion council for EoUs and SEZs and owner of a SEZ unit in Kolkata.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Article Management Solutions System Article Management Software S

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions