Under the revised draft of Direct Tax Code (DTC), the Finance Ministry is unlikely to continue giving income-tax sops to special economic zones (SEZ), even though assurance has been given by the Commerce Ministry regarding the protection of the SEZ investors interests.
Commerce and Industry Minister Anand Sharma, and Finance Minister Pranab Mukherjee have a meeting last week to discuss the issue.
The Finance Ministry has hinted that they were not inclined to give in to the request of the Commerce Ministry regarding extension of sops for a number of reasons.
Officials have said that the Finance Ministry is much more concerned over the revenue loss that is caused by extending tax sops to such units.
However, the Commerce Ministry is convinced that they have been successful in their SEZ scheme by attracting an investment worth Rs.1.50 lakh crore, giving direct employment to over five lakh people and handling exports of about Rs.2.20 lakh crore in 2009-10.
The draft has finally confirmed that SEZ developers and units that begin operating before the DTC is implemented on 1st of April, 2011, will continue to get tax exemptions on profits for the remaining years, but not the SEZs and units coming up after that.