MAT on SEZ dents India's image: Survey

NEW DELHI: Minimum alternate tax (MAT) imposed on Special Economic Zones (SEZs) has "dented" the country's image as an attractive investment destination, according to a survey by global research firm Ipsos.

The survey said 75% of the respondents felt that MAT has impacted India's credibility as a dependable investment destination. As many as 62% of the respondents have suspended plans of investing further in SEZs. The survey, conducted among 400 industrial units, sought to gauge the impact of imposition of MAT on units operating out of SEZs on country's investor perception and investment climate. The tax was introduced in the 2011-12 Union Budget.

The SEZ players said the benefits offered in the SEZ Act 2005, provided a wide range of incentives to investors in SEZs, including exemption from MAT and 100% income tax exemption on export income.

The Act also gave a boost to foreign direct investment in addition to substantial employment generation in India.

The survey attributed exemption from tax as the key reason for investment in SEZs, which stood nullified with the imposition of the MAT. "MAT imposition on SEZs has made our further investment in this country much more difficult ...We are hurt by government's volte face in respect of MAT on SEZs. We would like the government to re-consider its decision on MAT," the survey report said quoting one of the respondents.