Graded I-T exemption for units in special zones

the income-tax concession announced for units in special economic zones is likely to be a graded exemption for export profits over a specified number of years starting whenever the unit is set up, according to sources. the advantage, as compared to the current situation, would be that the tax concession would be available for the full tax concession period, and not be curtailed by the expiry of a notified date as happens now. currently, the income-tax concessions for sezs are for 10 years or 2009-10 whichever is earlier. therefore, if an sez were to start operations in, say, 2005 it would get the concession only for five years and not the full 10 years. as per the proposed new tax concession, a unit in the sez would be entitled to full income-tax exemption on export profits for the first five years of operation and 50 per cent of the export profits would be tax exempt for the next two years, say sources. the time period of the tax concession is likely to be seven years, according to sources. currently, export profits of sezs are fully tax exempt for 10 years from the year the unit starts operations but subject to the tax concession ending by the year 2009-2010. that is, if an sez were to start operation in 2005 under the current law it would get the income tax concession only till 2009-10 and not for the full 10 years. however, now the finance bill 2002 is proposed to be amended to bring in the new concession announced in the exim policy for sezs. and as per this new concession, the sezs export profits would enjoy graded income tax exemption for a time period, likely to be seven years, and not be subject to the deadline of 2009-10.