The Government will soon come out with new norms to revive special economic zones (SEZs), which have lost sheen after the imposition of certain levies and the proposal to take away tax incentives.
Commerce Secretary S.R. Rao said his Ministry has held a series of meetings with the Revenue Department officials on the matter.
“We are on the verge of getting a closure on the issues. I think in maximum 4-5 weeks, you should be seeing the new rules kicking in,” he said.
The government had imposed Minimum Alternative Tax (MAT) and Dividend Distribution Tax (DDT) on SEZs in 2010-11, which were earlier exempted from almost all levies.
Due to imposition of these levies, there has been a visible slowdown in growth of export from SEZs.
The Direct Taxes Codes (DTC) being considered by Parliament proposes to do away with the income tax exemption given to them and instead link tax sops to investments made in them. Profit-linked benefits were the main attraction of the SEZ scheme.
The initial phase of SEZ scheme, launched in 2006, saw developers lining up in big numbers for projects.
To boost investor confidence in the zones, the government is planning incentives for developers who want to set up SEZs in remote and undeveloped areas.
According to sources, the government is considering to relax minimum land area requirement for different categories of SEZs, besides extending the benefits of export schemes to SEZ units, that are already available to entities outside the zone.
Exports from SEZs stood at Rs 3.65 lakh crore in 2011-12. With investment of Rs 2.02 crore, these zones provide employment to over 8.45 lakh.
Overseas shipments from the 153 operational tax-free havens have come down to 12 per cent of the country’s total exports in 2011-12, from about 30 per cent in the previous years.