New Delhi, Feb 10 (IANS) India’s commerce ministry on Wednesday expressed hope that the forthcoming union budget will incorporate the ministry’s suggestions on granting tax benefits for special economic zones (SEZs) towards reviving the country’s exports.
Responding to queries from reporters on the sidelines of the industry chamber FICCI-organised India-Africa Agribusiness Forum on the commerce ministry’s suggestions on tax issues of SEZs, Commerce Secretary Rita Teaotia said: “We hope to.. we have made our submissions.”
India’s merchandise exports fell for the 13th straight month in December and were valued at $22.29 billion against $26.15 billion in the like month in the previous year, as per official trade data released on Monday.
The commerce ministry has suggested the removal of minimum alternate tax (MAT) on special economic zones in the budget.
Representatives of exporting industries told the government last month that levy of minimum MAT and dividend distribution tax (DDT) on SEZs have dented the investor-friendly image of SEZs and created uncertainty in the minds of both foreign and domestic investors.
“Imposition of MAT and DDT on SEZs has dented the investor-friendly image of SEZs, created uncertainty in the minds of foreign and domestic investors, and has adversely affected the growth, investments, employment and exports from SEZs in India and resulted in loss of valuable foreign exchange earning of the country,” Export Promotion Council for EOUs and SEZs chairman P.C.Nambiar told Commerce Minister Nirmala Sitharaman, according an official release.
He had requested that MAT should be totally withdrawn or at least reduced to its original rate of 7.5 percent, it added.
Meanwhile, the Confederation of Indian Industry (CII) said on Wednesday that the move to impose MAT and DDT would not be conducive for the practical viability of units operating in SEZs, and the “SEZ Act needs immediate remedial measures”.
“Sanjay Budhia, co-chairman, CII National Committee on International Trade Policy, has strongly suggested and asked the government to allow one-time 100 percent income tax holiday for five years for all manufacturing units in SEZ,” CII said in a release here.
“This will go a long way in motivating exporters to enhance and promote exports through their units in SEZ,” it added.