Wait...
Search Global Export Import Trade Data
Recent Searches: No Recent Searches

Muted relief over SEZ tax clarification.


Date: 11-07-2009
Subject: Muted relief over SEZ tax clarification
 New Delhi, July 10 The relief over the correction of an ‘anomaly’ pertaining to Section 10 AA of Income Tax Act — that will now allow companies to enjoy full tax benefits for operations in Special Economic Zones (SEZs) — is muted, as the amendment will take effect from April 2010, and not retrospectively.

This means that companies, including IT and BPO firms, which had established operations in SEZ as a unit and not as a separate entity, would be able to enjoy the full exemptions from assessment year 2010-2011, but no such relief would be available to them for the past years.

MindTree Ltd, which has operations in two SEZs (Bangalore and Chennai), said that last year 30-40 per cent of its total revenue came from SEZs.

If the issue is not addressed, the company’s extra tax outgo (on account of the anomaly) would stand at Rs 10 crore for the financial year 2009.

“It is a huge issue. The basis on which all of us committed investments into SEZs over the last two-three years, was the benefit of tax exemption for the first five years,” said Mr Rostow Ravanan, Chief Financial Officer of MindTree.

The crux of the issue is the method of computation of exempted profits in the case of SEZs. The original wording had prompted some companies to set up operations in SEZs as a separate entity.

The Government, in the Interim Budget, had decided to remove the anomaly with regard to the language of Section 10 (AA). The full Budget now seeks to correct the ‘anomaly’ such that exemption would be calculated on the total turnover of an undertaking. But what has disappointed the IT industry is the fact that the proposed amendment will be effective from April 1, 2010 and, accordingly, apply to the assessment year 2010-11 onwards.

The Chairman of National Association of Software and Services Companies (Nasscom), Mr Pramod Bhasin, said, “We will have to discuss this. The Government has done a lot for us. As far as this change is concerned, we want to ask them, understand the intention. We will engage in a dialogue with them.”

Many IT industry officials feel that an amendment with a prospective effect could lead to litigations. “It leaves room for confusion and litigation. The issue will not impact WNS, (a global BPO) as we have set up SEZ operations as separate entity, but from an overall industry point of view, many companies who which have set up SEZ operations as units, will face a problem,” said Mr Alok Misra, Group Chief Financial Officer of WNS.

Source : Business Line


Get Sample Now

Which service(s) are you interested in?
 Export Data
 Import Data
 Both
 Buyers
 Suppliers
 Both
OR
 Exim Help
+


What is New?

Date: 18-09-2025
Corrigendum
Corrigendum to Notification No. 9/2025 – Central Tax (Rate) dated 17.09.2025

Date: 17-09-2025
Notification No. 13/2025-Central Tax (Rate)
Seeks to amend Notification No. 21/2018- Central Tax (Rate) dated 26.07.2018.

Date: 17-09-2025
Notification No. 14/2025-Central Tax (Rate)
Seeks to notify GST rate for bricks.

Date: 17-09-2025
Notification No. 37/ 2025-Customs
Seeks to amend Notification No.19/2019-Customs dated 06.07.2019

Date: 17-09-2025
Notification No. 38/ 2025-Customs
Seeks to amend Notification No.29/2025-Customs dated 09.05.2025

Date: 17-09-2025
Notification No. 39/2025-Customs
Seeks to amend Notification No.50/2017-Customs, dated 30.06.2017

Date: 17-09-2025
NOTIFICATIONNo. 15/2025 – Central Tax
Seeks to exempt taxpayer with annual turnover less than Rs 2 Crore from filing annual return.

Date: 17-09-2025
NOTIFICATION No. 16/2025–Central Tax
Seeks to notify clauses (ii), (iii) of section 121, section 122 to section 124 and section 126 to 134 of Finance Act, 2025 to come into force.

Date: 17-09-2025
Notification No. 12/2025-Central Tax (Rate)
Seeks to amend Notification No. 8/2018- Central Tax (Rate) dated 25.01.2018.

Date: 17-09-2025
NOTIFICATION No. 14/2025 – Central Tax
Seeks to notify category of persons under section 54(6).



Exim Guru Copyright © 1999-2025 Exim Guru. All Rights Reserved.
The information presented on the site is believed to be accurate. However, InfodriveIndia takes no legal responsibilities for the validity of the information.
Please read our Terms of Use and Privacy Policy before you use this Export Import Data Directory.

EximGuru.com

C/o InfodriveIndia Pvt Ltd
F-19, Pocket F, Okhla Phase-I
Okhla Industrial Area
New Delhi - 110020, India
Phone : 011 - 40703001