Units in SEZ face higher taxes compared to units outside: CAG

NEW DELHI: The Comptroller and Auditor General of India ( CAG) has pointed out that units in the Special Economic Zones (SEZs) faced higher taxes compared to the units outside, providing support to the demand for withdrawal of levies on these zones.

In a report tabled in Parliament on Friday it said in 2012-13 SEZ units were being taxed at 37%, higher than a similar unit outside that would pay tax at the rate of 32.44%.

The report “Performance of Special Economic Zones’ said that a number of factors have contributed towards pulling down the growth of SEZs such as imposition of minimum alternate tax (MAT) and dividend distribution tax ( DDT) and non-availability of export incentives such as focus product and focus market schemes.

The commerce and industry ministry has been demanding a rollback of these taxes. Many developers have withdrawn their plans citing unviability of these zones.“...(this) may partially answer the question regarding reasons for many units seeking extensions, resizing and denotification of the proposed projects,” the report said.CAG also questioned government’s policy where the ownership of land acquired by the state government for a SEZ is transferred to the developer.