SEZ package in works to push exports.

NEW DELHI: Special Economic Zones (SEZs) may have missed out on tax concessions in the Budget but the government is working on a comprehensive package for the enclaves to boost exports, investment and overall economic activity.

Top government officials told TOI that the commerce department, which has been pushing for a revival of the zones, is going to make a fresh pitch for doing away with minimum alternate tax and dividend distribution tax. Unlike earlier, the finance ministry too is not rejecting the proposal right away. "It could not be included in the Budget since the government is working on a package of sorts for SEZs. We will take up the issue with the finance ministry," said a senior tax department officer, who did not wish to be identified.

Commerce department officers said that they are discussing various possibilities with the revenue department to ensure that some of the unused infrastructure, such as schools and hospitals, are used even by those who are not part of the zones so that the investment in the facilities isn't wasted. "The customs authorities had some concerns over the duty benefits flowing out of the zone and we have suggested two-three options. Hopefully, it will be done by the time we present the Foreign Trade Policy," said a senior commerce department officer. The BJP government's first FTP is expected to be presented next month.

In addition, the department has sought that the benefits of several schemes used by other exporters flow to those shipping goods from units in SEZs. "After all, they are also exporting from India. So why should we discriminate against them?" an officer said.

The revenue department had in the past blocked any attempt to provide duty concessions and had even impressed upon Pranab Mukherjee to levy MAT and dividend distribution tax despite the government promising the benefits in a law specially meant for SEZs. But with a change of guard, government interest in the zones has returned. In fact, soon after taking charge, Prime Minister Narendra Modi had himself shown interest and wanted to discuss various options with the revenue and commerce secretaries.

"We are hoping that the tax concessions are announced during the process of getting this Budget approved," said a senior commerce department officer. Several international investors, which had invested in SEZs during its heydays, are now facing difficulties with the tax authorities. For instance, Nokia has been served a transfer pricing notice, while Brandix, which supplies lingerie to global players, had its own set of problems. Officials and investors often complain that despite a law only for zones, getting approvals remains a problem.

SEZs, which have emerged as major export hubs, account for around a third of the country's merchandise exports and provide employment to around 15 lakh persons. Of the 566 formally approved SEZs, only 185 are in operation.

Source : timesofindia.indiatimes.com