Finance minister Pranab Mukherjee on Thursday assured Special Economic Zone (SEZ) developers that the government will provide extra time beyond the cut-off date of April 1, 2011 when the proposed Direct Tax Code (DTC) comes into effect scrapping income tax exemptions.
The FM said besides this concession, the government will continue to give investment-linked tax benefits to SEZ units and developers. Only the profit-linked tax exemptions will be withdrawn in the proposed DTC.
Mukherjee's clarification came while responding to a Ficci real estate representative who raised the issue with the FM at its executive committee meeting in the capital saying the government is reneging from its commitment given to the SEZ developers who have pumped in thousands of crores in the sector in the past few years.
"We will fulfill all commitments that we have given," the FM said, adding that till the cut-off date all units that start operation will get the tax benefit. "Certain extra time will be given beyond the cut-off date," he added.
He said the DTC would be introduced in the monsoon session of Parliament and gradually it would be made broadbased as it is not possible to address all concerns of such a large economy at one go.
Speaking about the Goods and Services Tax (GST), FM said this will bring in a new federal concept where both states and the Centre will legislate on imposing duties together. He said with GST, it will propel India into a $2 trillion economy. "The expected net present value of GST gain exceeds half a trillion dollars. The gain from GST will propel India from a $1 trillion economy to a $2 trillion economy in a short span of time."
He said the input credit in the GST structure will be available where duties paid on raw material can be availed as benefit on the final product.