DIRECT TAXES
| 20Percent MAT on developers will impact SEZs Wed, 01 Sep 2010 |
| The Hindu 20 % MAT on developers will impact SEZs NEW DELHI: The Direct Taxes Code Bill, introduced in Parliament on Monday, is likely to impact special economic zones (SEZs) badly as it proposes higher Minimum Alternate Tax of 20 per cent on the book profits of developers as well as units from April 1, 2012. Commerce Ministry Officials have reacted adversely to this saying that the 20 per cent MAT on SEZ developers and units could well be curtains for SEZs and make the whole Act dead. MAT is a tax imposed on profit-making companies that do not fall under the tax net because of various exemptions. The officials said as such, MAT would be imposed on developers and units in SEZs from that date. Units in SEZs get 100 per cent income-tax exemption on export income for the first five years and 50 per cent for the next five years. They are also exempted from MAT. BoA meet With the DTC proposals having been known to investors, several SEZ developers have already asked the Board of Approval for permission to surrender their projects. The board is scheduled to meet on September 16. The officials also said that after the implementation of the Direct Taxes Code, State governments would also revoke the exemptions they have given to the tax-free enclaves. Exports Along with the Central government, States also exempt SEZs from local taxes like octroi and sales tax. Exports from 114 operational SEZs went up to Rs.2.20 lakh crore in 2009-10 from Rs.22,000 crore in 2005-06. The Export Promotion Council for EoUs and SEZs has expressed concern over the development and stated that by altering the SEZ Act through the DTC Bill, the government was sending a wrong message to investors. “These provisions do not meet the requirement of the SEZ scheme fully and would seriously affect employment, exports and investment in the SEZs,'' council Chairman R.K. Sonthalia said in a statement. |
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