The commerce ministry will hold an open house meeting in Mumbai next month to sort out issues regarding Special Economic Zones (SEZs), including ineffective functioning of the single window clearance mechanism of SEZs in several states.
The meeting -- to be attended by officials from the Reserve Bank of India, Directorate General of Foreign Trade, Central Board of Excise, Customs, Central Board of Direct Taxes (CBDT) and state governments -- is also likely to discuss objections from developers on a proposal to impose minimum alternative tax on the tax-free enclaves. It would also take up outstanding procedural problems that are affecting the functioning of SEZs and Export Oriented Units (EOUs). Issues regarding duty drawback claims, refund of various duties to EOUs and SEZs, providing service tax exemption on authorised operations, which are used outside the SEZs such as transport and logistics would also be discussed in the meet. The finance ministry is opposed to such service tax exemption to SEZs.
Only 8 states, including Gujarat, Tamil Nadu, Uttar Pradesh, Maharashtra and Andhra Pradesh, have passed their own SEZ laws for smoother implementation of the Centres SEZ policy. Out of these 8 states, only Gujarat has constituted a single-window clearance mechanism for faster clearance to SEZ projects, including permissions on electricity, water, pollution, building construction and granting easier refund of state level taxes.
The Prime Ministers Economic Advisory Councils (EAC) suggestion to impose a 10% minimum alternative tax on SEZs, instead of asking them to fulfill 51% export obligations suggested by the finance ministry will also be debated. The EAC to the PM had also mooted that indirect tax exemptions on trade from the non-processing areas in SEZs to the DTAs should be removed.
The meeting, to be chaired by commerce secretary G K Pillai and organized by the Export Promotion Council for EOUs and SEZs, will also be attended by development commissioners of SEZs as well as developers of SEZs and EOUs. The ministry has so far held over 20 open house meetings in all four metros as well as in smaller cities like Pune, Surat and Ludhiana . The suggestions from the meeting would be considered for amendment of SEZ Rules for streamlining the policy.