SEZ developers get stamp duty waiver

NEW DELHI: Developers of Special Economic Zones (SEZs) will get a blanket exemption from stamp duty on land purchases within the notified area for non-core activities such as building hotels, housing complexes, shopping malls and golf courses, according to a government official.

The exemption had become a contentious issue with states, where these projects are located, demanding that it be restricted to core manufacturing areas, which has to cover at least 50% of the total SEZ land.

The government has extended this to cover the whole area and has issued guidelines detailing circumstances in which the sop can be availed of, said the official, asking not to be named. For the developers of the 500-odd SEZs slated to bring in investments of over Rs 1 lakh crore, this ends the uncertainty that had cropped up after some states had voiced their opposition.

Orissa had objected to the Centre giving such a tax sop without consulting states and had termed the move as ultra vires.

It had pointed out that while the Centre had powers to legislate on stamp duty, the power to fix rates of the duty lay with the states.

This had forced the commerce department to seek law ministry���s opinion on the provision in the SEZ Act.
As per the new guidelines, the facility of stamp duty exemption on purchase of land by a SEZ developer for activities such as housing, hostel, recreation and entertainment would be available only with respect to land that falls within the SEZ area.

However, any facility will not be available outside the zone. Moreover, stamp duty exemption will be applicable on sale or lease of land to units or entities permitted to carry out operations within SEZ.

The exemption, however will be available only after formal approval of the zone. For the propose of land bought before formal approval, but after in-principle approval, the state government may either give the exemption of stamp duty upfront or collect the duty and refund it after the zone has been set up. If under some circumstances, notification of a zone is cancelled, a state government will be entitled to withdraw the concession of stamp duty and recover the same from developer.