ComMin seeks tax concession for SEZ units

NEW DELHI: The Commerce Ministry has decided to seek concessional tax structure for SEZ units, with a view to helping them tide over the current economic woes.

The Commerce Ministry, according to an official, is also proposing a tax structure under which the duty forgone towards sale of products in domestic tariff area (DTA) could be recovered once the situation improves.

"Several SEZ units in sectors like auto components, textiles and pharmaceuticals are not able to export due to global demand slowdown. A tax concession can be given to those units to sell their products in the domestic market," the official said.

At present, units in the special economic zones would have to pay full duty if they sell goods in the DTA (or domestic market).

"The tax concessions will help them in boosting their manufacturing process. The units will work with full capacity," the official said, adding that "we are in the process of starting consultation with the Finance Ministry officials".

There is a need to boost the manufacturing sector in the country in order to create jobs and revive India's economic growth.

Industrial output has slowed down sharply to 0.6 per cent in August mainly due to contraction in manufacturing and mining.

Once an attraction for investors, SEZs have lost sheen after the imposition of Minimum Alternate Tax, Dividend Distribution Tax in 2011 and certain provisions in the proposed Direct Tax Code regime as well as global demand slowdown.

However, the government had announced incentives like easing of land requirement norms to revive investor confidence in SEZs.

As many as 58 SEZ developers have surrendered their projects due to various reasons, including global economic slowdown, till July 31 this year.

The government has formally approved 576 such zones out of which 173 have commenced exports.

During April-June, exports from these zones stood at USD Rs 1.13 lakh crore. During the same period, the country's overall exports aggregated to Rs 4.05 lakh crore.