Finance ministry has stated that it is presently considering a package of tax and non-tax incentives to revive special economic zones (SEZs) in the country and final decision on this is likely to be taken soon. Over the past few years, investors have lost confidence in SEZs as the government has withdrawn the tax incentives available to SEZ developers and the units there in. Out of the 566 formally approved SEZs, there are only 185 SEZs currently operating in the country.
According to the original provisions of the Special Economic Zones Act, 2005 and Rules, 2006, SEZ developers and units were exempted from Minimum Alternate Tax (MAT). However, the government during budget 2011-12 imposed 18.5 per cent MAT on the book profits on SEZ developers and units. The imposition of Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) has dented the investor sentiments.
It has become imperative to revive the SEZ to provide an impetus to manufacturing sector, which has registered near zero growth in last two financial years. SEZs contribute about 30 per cent to India’s exports and provide employment to around 15 lakh workers. Exports from these zones increased from Rs 22,840 crore in 2005-06 to Rs 4.94 lakh crore in 2013-14.