The Commerce Ministry will shortly roll out an online platform for SEZs to help developers and units raise all their concerns on doing business, including a withdrawal or reduction of minimum alternate tax (MAT) imposed on Special Economic Zones (SEZ).
The imposition of 18.5 per cent MAT on SEZ units & developers in the FY’12 Budget was the main factor that led to a fall in investments in SEZs. Though the Commerce Ministry had on earlier occasions raised the issue, the Finance Ministry had rejected it on the ground that MAT exemption would lead to revenue loss.
Speaking at an event on SEZs organised by the industry body Assocham, A.V. Chaturvedi, Additional Secretary in the commerce department, said: “… it (MAT) appears to be unfair for SEZ units and it is not in tune with the government philosophy of stable tax regime. We have taken up the issue (again) with Finance Ministry.”
He said according to the Finance Ministry, MAT has been imposed to partly recoup the loss of revenue due to profit-linked exemptions.
“They (the finance ministry) are reducing the average corporate tax rate. However, we (commerce ministry) have raised it again citing adverse export conditions and the important role played by SEZ in export growth and employment generation.”
Mr. Chaturvedi said the web-based platform will help SEZ units and developers raise such concerns with the concerned authorities so that there is a constant dialogue and transparency in the resolution of issues. The commerce ministry intends to “roll it out as soon as possible,” he said adding that, “the software is already in place, we need to adopt it for our requirement, efforts have already been made in this direction.”
The online platform would be similar to the Project Monitoring Group in the Cabinet Secretariat.
The issue of utilisation of available SEZ capacity by allowing SEZ units to carry out job works for units in Domestic Tariff Area (or DTA, area outside the SEZ) has also been taken up as currently, this was not permissible, he said.
The Commerce Ministry has raised with the Finance Ministry the proposal to allow exports from special economic zones to DTA at the concessional tariff rates as given to India’s free trade agreement partner countries.