| Date: |
17-03-2011 |
| Subject: |
SEZ Developers Get Cold Feet |
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New Delhi, March 16: Uncertainty over tax exemptions to new special economic zones (SEZs) is taking the sheen off these tax-free enclaves.
More than 40 developers have sought extra time from the government to implement their projects.
Developers of Reliance Haryana SEZ, Parsvnath SEZ and Ranbaxy Laboratories are among those to ask for more time.
The board of approval (BoA), a 19-member inter-ministerial body that deals with matters relating to SEZs and headed by commerce secretary Rahul Khullar, is scheduled to meet next week to take a call on the issue.
Reliance Haryana SEZ Ltd, which is in the process of acquiring land, has requested for an extension of the in-principle approval till March 2015 stating that the acquisition process is time-consuming. It has requested the Haryana government to acquire the balance land for a contiguous plot of minimum 1,000 hectares to be able to start development work. The developer, which is planning to set up a multi-product SEZ at Gurgaon in over 5,000 hectares, has so far acquired 1,060 hectares.
Three promoters have approached the commerce ministry to surrender their projects, citing global economic uncertainty. These include Maharashtra Industrial Development Corporation’s tax-free enclave at Solapur and Gujarat Hydrocarbons and Power SEZ Ltd’s proposed zone in Gujarat.
According to an industry expert, uncertainty over tax exemptions to new SEZs has led to declining interest in the tax-free enclaves. Investors are also apprehensive about the new draft direct taxes code (DTC). According to the revised DTC draft, which will replace the Income Tax Act of 1961, tax exemptions to SEZs will be confined to existing units.
In Union Budget 2011-12, finance minister Pranab Mukherjee has proposed a minimum alternate tax (MAT) of 18.5 per cent on the book profits of SEZ developers and units. The changes in the tax rate will be effective from April 2012. Earlier, SEZ developers and units were exempt from MAT under Section 115 JB of the Income Tax Act.
Khullar said the withdrawal of tax exemption would dent both the viability of the SEZ scheme and India’s image as a safe investment destination.
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Source : telegraphindia.com
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