Fearing a Rs 1-lakh crore revenue loss on account of sops given to special economic zones (SEZs) in the next five years, the revenue department is setting up a special cell to monitor them.

The cell, which will have officers from both the Central Board of Direct Taxes and the Central Board of Excise and Customs, will vet the proposals before they are taken up for approval by the Board of Approval (BoA) for SEZs. The cell would be represented at the BoA meeting. It would also deal with all other matters coming up during the setting up of the SEZs including procedures, rules and regulations.

At present, all proposals and related matters go separately to CBEC and CBDT for examination. The BoA also has representatives from both the boards. Sources said since the core concern of both the boards is to save revenue, a need was felt to cut down on multiplicity of approach and evolve a central body to deal with all issues related to SEZs.

The cell would also be the single-point of reference for field formations for clarification on all issues including direct and indirect taxes. Sources said certain procedural changes may be required on the field when SEZs go full steam. The cell would be equipped to handle the situation.

It would be housed under the Directorate General of Export Promotion. The government has received over 650 SEZ proposals so far. Of these, 237 have been granted approval and are spread over 17 states and 2 union territories. A total of 51 SEZs have been notified so far. A large number of these SEZs are for textiles and apparels, leather footwear, auto components, engineering and other sector specific SEZs.