DIRECT TAXES
| MAT will impact SEZ concept: Sharma Sat, 05 Mar 2011 |
| NEW DELHI: Union Commerce and Industry Minister Anand Sharma on Friday expressed concern at the budget proposal of the Finance Minister, Pranab Mukherjee, to impose Minimum Alternate Tax (MAT) on SEZ (special economic zone) developers and units. Talking to reporters here, Mr. Sharma said he had taken up the matter with Mr. Mukherjee and expressed concern that it would impact the SEZ concept. The Finance Minister has proposed to levy MAT of 18.5 per cent on the book profits of Special Economic Zone developers and units. The changes in the tax rate would be effective April 2012. Both developers, as well as units in the tax-free enclaves, were earlier exempted from MAT under Sec. 115 JB of the Income-tax Act. “I have discussed this with Mr. Mukherjee and I have written to him. Surely it is a matter of concern,” he said. MAT was scheduled to be imposed on SEZs when the Direct Taxes Code (DTC) is rolled next year. However, the Finance Minister has assured him that the benefits and concessions that were available to the developers until 2012 and units until 2014 will be there. “Our understanding has been that we will try to align imposition of MAT with the coming in of the DTC,” he added. MAT was introduced in 1987 to bring companies that paid no or very little tax, after taking advantage of the exemptions provided by the Income-tax Act, into the tax net. The Government has also proposed to impose dividend distribution tax on SEZ developers, which would come into effect from June this year. Exports Exports from SEZs contribute about one-third of the country's total exports. Shipments from these zones during April-December 2010 grew by 47 per cent to Rs.2,23,132 crore vis-a-vis the same period in the previous year. So far, 582 SEZs have been formally approved by the Board of Approval (BoA), of which 130 are in operation. SEZs have emerged as major sources for attracting investment and increasing exports. |
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