Manufacturing units in SEZs may get tax incentives

NEW DELHI: The government is expected to provide tax incentives to units in special economic zones (SEZs) which are mainly into manufacturing activities, a move which will help in attracting investments in the zones.

Export promotion body for special economic zones has asked the Finance Ministry to roll back or reduce the minimum alternate tax ( MAT) and dividend distribution tax ( DDT) on SEZs.

"Commerce and Finance Ministry are discussing various proposals to boost overseas shipments as well as manufacturing in SEZs. Manufacturing units in these zones may get some tax benefits," sources said.

Incentives to the zones are likely to be announced during the release of the new foreign trade policy, which is expected by the end of this month.

In 2011, the government had imposed 18.5 per cent MAT on the book profits of special economic zone developers and units.

Although government last year announced an incentive package to revive these zones, several developers are surrendering their projects due to imposition of taxes.

Commerce and Industry Minister Nirmala Sitharaman had earlier said that the government was looking at the demands of SEZ developers and units on MAT and DDT.

SEZs, which are major export hubs, contribute about one- third to the country's total exports. They provide employment to about 15 lakh people.

Of 566 formally approved SEZs, only 192 are operational. Of the total zones which are in operations, about 100 are into IT/ITeS related activities. Exports from these zones increased from Rs 22,840 crore in 2005-06 to Rs 4.94 lakh crore in 2013-14.