Commerce Minister asks for restoration of tax benefits to SEZs

The Commerce Ministry has asked for restoration of the tax benefits for special economic zones to revive them, Parliament was informed on Wednesday.

Ministry of Commerce and Industry (Department of Commerce) has recommended the restoration of original exemption from Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) to SEZ developers and units, Minister of State for Commerce & Industry Nirmala Sitharaman said in a written reply to the Rajya Sabha.

The industry has been complaining that MAT and the DDT on SEZs have dented the investor sentiment.

As per the original provisions of the Special Economic Zones Act, 2005 and Rules, 2006, SEZ developers and units were exempted from MAT.

SEZs, which are major export hubs, contribute about one-third to the countrys total exports. They provide employment to about 15 lakh persons.

The government had imposed 18.5 per cent MAT on the book profits of SEZ developers and units. Of the 566 formally approved SEZs, only 185 are in operation.

Exports from these zones increased from Rs 22,840 crore in 2005-06 to Rs 4.94 lakh crore in 2013-14.