Friday, July 22, 2011

Board of Approval on SEZs

              The government will consider proposals from six SEZ developers, including Parsvnath Group, to shelve their projects tomorrow, besides several requests for more time to develop special economic zones on account of the difficult business environment. As many as 45 SEZ developers, including Raheja SEZ and Navi Mumbai SEZ, have sought more time to execute their projects.
              Parsvnath SEZ Ltd has offered to surrender six SEZs that were earlier granted in-principle approval by the government.
              "The developer has requested for withdrawal of in-principle approval, citing economic (in realty market) slowdown, Direct Tax Code (DTC), imposition of minimum alternate tax (MAT) as the reason for the same," it said.
              Parsvnath had got in-principle approval for leather and handicrafts SEZs at Agra and Moradabad, respectively, a gems and jewellery tax-free zone in Jaipur, a food processing SEZ in Sonepat, an auto component zone in Pune and a multi-product SEZ in Kanchipuram.
              The draft DTC has proposed the withdrawal of exemptions for new units that come up after the tax code is implemented and replacement of tax exemption on profits for developers with sops on investments. The DTC is expected to implemented from next fiscal.
              The industry has also expressed concern over the imposition of Minimum Alternate Tax (MAT) of 18.5 per cent on the book profits of SEZ developers and units.
              Under the SEZ Act, SEZ units get 100 per cent tax exemption on profits earned for the first five years, a 50 per cent exemption for the next five years and another 50 per cent exemption on re-invested profits in the following five years.
              SEZ developers, on the other hand, get 100 per cent tax exemption on profits for ten years.
              Five developers have approached the BoA to de-notify their tax-free enclaves. SEZs in India have emerged as significant manufacturing and export bases.
              Meanwhile, two developers -- Radiant Corporation and Anique Infrastructure -- have requested permission to set up new tax-free enclaves in Andhra Pradesh and Gujarat, respectively.
              Exports from SEZs increased by 43 per cent to Rs 3,15,868 crore in 2010-11 vis-a-vis the same period of the previous fiscal. A total of 6.76 crore jobs were also generated.