In a move which would help in attracting investments in the zones, the government is expected to provide tax incentives to units in special economic zones (SEZs) mainly into manufacturing activities. In yet another development for the revival of these zones, Export promotion body for special economic zones has requested the Finance Ministry to roll back or reduce the minimum alternate tax (MAT) and dividend distribution tax (DDT) on SEZs. It is in view of this, Commerce and Finance Ministry has been discussing various proposals to boost overseas shipments as well as manufacturing in SEZs. Manufacturing units in these zones may get some tax benefits.
Back in 2011, the government had imposed 18.5% MAT on the book profits of special economic zone developers and units, though after that it announced incentive package to revive these zones in the previous year, many of the developers surrendered these projects due to implementation of these taxes.
However, the incentives to the zones are likely to be announced during the release of the new foreign trade policy, which is expected by the end of this month. SEZs, which are major export hubs, contribute about one- third to the country's total exports. They provide employment to about 15 lakh people. However, Of 566 formally approved SEZs, only 192 are operational.