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MAT imposition has slowed down growth of SEZs: Nirmala Sitharaman.

Date: 21-01-2016
Subject: MAT imposition has slowed down growth of SEZs: Nirmala Sitharaman
NEW DELHI: Noting that imposition of minimum alternate tax (MAT) and Dividend Distribution Tax (DDT) has led to a slowdown in the SEZ sector, the Commerce Ministry today said it has taken up the issues with its Finance counterpart.

These issues were discussed during the meeting of members of Export Promotion Council for EOUs and SEZs (EPCES) and Commerce Minister Nirmala Sitharaman here yesterday.

The minister "informed that due to imposition of MAT/DDT, there has been slowdown in the SEZ sector in terms of growth in SEZs," an official statement said.

It said the ministry is in the process of identifying the reasons for this slowdown in the sector.

"The Minister assured the members of the delegation that the ministry has already taken up this issue with Ministry of Finance," it added.

The industry is demanding roll back or reduction in these taxes to boost exports from special economic zones (SEZs).

The Commerce Minister also assured to look into the matter raised by the industry regarding preferential rates of free trade agreements to import from SEZs by domestic tariff area (domestic market), use of land in non-processing area, and dual use of land in non-processing area.

In the meeting, EPCES Chairman P C Nambiar said that the imposition of MAT and DDT has dented the investor friendly image of SEZs, created uncertainty in the minds of foreign and domestic investors and has adversely affected the growth, investments, employment and exports from SEZs.

It has also resulted in loss of valuable foreign exchange earning of the country.

"He requested that MAT should be totally withdrawn or at least reduced to its original rate of 7.5 per cent," it said.

As regards proposal for abolition of all direct tax benefits for SEZs not operationalized before April 2017, Nambiar informed that Central Board of Direct Taxes is considering this proposal.

It was requested to extend the sunset clause on SEZs up to 2023.

"The Commerce Minister informed that the issue has already been taken up with Finance Minister to remove the sunset clause on SEZs. Nasscom has also taken up this issue," the statement said.

During April-September this fiscal, exports from these zones stood at Rs 2.21 lakh crore as against Rs 4.63 lakh crore in 2014-15.

During the first half of this fiscal, these zones generated jobs for 15.44 lakh people.

Source : economictimes.indiatimes.com

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