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: empanelment :: due date for vat payment :: ACCOUNTING STANDARD :: TDS :: TAX RATES - GOODS TAXABLE @ 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: list of goods taxed at 4% :: form 3cd :: VAT Audit :: cpt :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: articles on VAT and GST in India :: VAT RATES
 
 
Indirect Tax »
 5 crucial ways how doing business will be different under GST
 What is the lowdown on the Goods and Services Tax
 Ineligible Input Tax Credit Under Gst Regime
 What is GST, how is it different from now: Decoding the indirect tax regime
 Indirect tax collection can fall short of FY’17 target
 GST in last lap: What's in it for businesses, firms and most importantly, you?
 Indirect tax collection: All you want to know about stuck cases and rejected appeals
 Government achieves revised tax collection target
 Keep indirect taxes 'low, affordable' under GST
 Keep indirect taxes 'low, affordable' under GST
 Education, healthcare will continue to remain out of service tax under GST

I-T dept adds to woes of SEZ units
August, 01st 2014

The income-tax department on Wednesday clarified that businesses running Special Economic Zones (SEZs) in the IT and ITeS sector would not be eligible for income-tax sops if these export units have more than 20% of their employees deputed from other units by way of business restructure.

For SEZ units, which were disappointed with the government not removing the minimum alternate tax (MAT) and dividend distribution tax (DDT) in the first full-year Budget of the Modi government, the tax department’s move brings added woes, said industry experts.

The finance ministry that examined the quantum of exports from SEZ units and from the domestic tariff area as part of its budget-making exercise then concluded that exports from these duty-free enclaves were actually the business that got shifted from domestic tariff area in order to claim tax benefits and that tax sops had actually failed to create fresh exports or quality infrastructure.

The Income-Tax Act mandates that benefit of allowing a business to deduct SEZ export profits from their total taxable income shall be available only if these units are not formed by splitting up, or reconstructing an existing business. The norm is applicable for plant and machinery too, but the law was silent on redeployment of manpower, which is the most important resource in the IT and ITeS industry.

The circular issued on Wednesday clarified that mere transfer or re-deployment of existing technical manpower to a new SEZ unit in the first year of business will not be construed as splitting up or reconstruction of existing business if the transferred technical manpower does not exceed 20% of the total technical manpower engaged in the business. The rider is applicable at all times of an assessment year.

Experts said that in the case of disputes, courts had earlier held that manpower was not covered by the rider preventing restructured business availing the tax benefit. Some criticised the move saying the circular was not in sync with the Income-Tax Act provision.

Analysts pointed out that the Rangachary Committee that examined taxation of the IT sector, had in its 2013 report, said that there was no requirement regarding appointing new employees in a unit eligible for profit-linked deduction. It had also suggested that assigning existing staff in a new SEZ cannot be considered reconstruction of existing business for tax purposes.

The panel, however, proposed a prospective change in norms by way of having a threshold of 50%

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Company Overview

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