Ministers panel to resolve tax issues for IT SEZs

NEW DELHI: An empowered group of ministers is meeting here on Thursday to find a way of removing anomalies in calculation of tax benefits for IT special economic zones, which account for bulk of the SEZs approved.

"The issue (relating to Section 10 (AA) of the Income tax Act) will be discussed by eGom. Ministers will take a decision," Commerce Secretary G K Pillai told reporters here on Wednesday.

Pillai said Section 10 (AA) needs to be amended so that the tax benefits under the SEZ Act are given without any distortion.

The section provides exemption from income tax to the SEZ units on the export income. For calculating the exemption, export turnover is divided by the total turnover of the assessee. But an assessee may have a unit outside the SEZ as well.

In the absence of change in the law, the IT SEZs promoted by most of the big groups such as Wipro, TCS, Satyam and Infosys stand to lose. Of the 531 SEZs approved, 320 are IT and ITeS units.

At its last meeting on October 24, the eGom headed by External Affairs Minister Pranab Mukherjee decided to clear Essar's steel SEZ in Hazira and Adani's port SEZ in Mundra. Both the Essar and Adani SEZs were facing objections from the Revenue Department on different counts.