Latest Expert Exchange Queries
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) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: ACCOUNTING STANDARDS :: TDS :: form 3cd :: empanelment :: VAT RATES :: ACCOUNTING STANDARD :: cpt :: TAX RATES - GOODS TAXABLE @ 4% :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: due date for vat payment :: VAT Audit :: ARTICLES ON INPUT TAX CREDIT IN VAT :: list of goods taxed at 4% :: articles on VAT and GST in India
« General »
 PMC may decide on property tax rebate for IT firms this week
 I-T Dept is giving out certificates of appreciation. Have you received yours?
 Government works on ironing out benefits refund mechanism for exportersa
  Tax officials are using an IDS provision to question transactions beyond six-year-limit
 Tax-free bonds rally like midcap funds
 Senior citizens do not have to pay advance tax on salary and interest income
 GST: Audit commissioners to get adjudication powers
 Interest on NRE rupee account can be exempt from tax under FEMA
 Impact of GST on Real Estate Sector
 GST regime: Tax payers allowed to take option of third-party interfaces
 CAG lens on entities avoiding tax with ‘farm income’ claim

Middle path on SEZ tax mooted
July, 22nd 2010

The commerce department has sought a middle of the road solution to the taxation problems thrown up by the draft direct taxes code for special economic zone that enjoy substantial tax concession.

In a letter to the revenue department, the department has suggested ways in which the finance ministry could implement the new tax dispensation so that the investments already made in the zones continue to get the incentives promised under the current rules.

SEZ developers and units have to be given some sort of assurance that the current tax incentives would continue for some time, a commerce ministry official said. The direct taxes code, or DTC, seeks to do away with the tax exemptions for all the units located in these special economic zones and has suggested replacing profit-linked exemptions available to developers of these enclaves of export excellence with investment-linked exemptions.

Interestingly, the opposition to the proposal comes despite the fact that the proposed tax regime would affect the zones and units which come up after April 1, 2011, the expected date for implementing the DTC.

The department is of the view that though the regime will apply prospectively, it does create uncertainties for investors.

For instance, a SEZ that is under development could get caught in the transition. Investments from units that the developer was counting on may not flow in as envisaged because they would no longer be eligible for tax exemptions.

This could lead to all profitability calculations made by the developer go awry, the official said.

While the official refused to give details of all proposals made by the department as it would ``first need to be discussed with the finance ministry, he said that it was a solution which would ensure that SEZ developers and units do not feel short changed.

SEZ developers are, however, reluctant to shift to the new taxation regime. R K Sonthalia, chairman of export promotion council for EoUs and SEZs, said income tax benefits are not given to SEZ units nobody would want to invest in them.

In a meeting with finance minister Pranab Mukherjee and commerce and industry minister Anand Sharma, the council pointed out that indirect tax benefits were available outside SEZs under schemes such as the focus product scheme and focus market schemes which were not available to exporters within SEZs, and no investor would, thus, want to invest in units in SEZs.

Mr Sonthalia went to the extent to saying that the revised DTC would lead to curtains for the SEZ scheme.

Under the present SEZ regime, SEZ 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. SEZ developers, on the other hand, get 100% tax exemption on profits for ten years which they can choose in the block of the first fifteen years.

Once the DTC gets implemented, tax benefits enjoyed by SEZs, especially in sectors like IT where investments are low, could go down considerably. Developers may also have to pay a minimum alternative tax (MAT) of 18% as the proposed DTC has no provision of giving any sector exemption from MAT.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - We Bring IT. Offshore software outsourcing company. We use Global Delivery Model (GDM) and believe in Follow The Sun principle

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