The Board of Approvals (BoA) for Special Economic Zones (SEZs), headed by Commerce Secretary Rahul Khullar, has allowed real estate majors Parsvnath Group to withdraw its six SEZs projects in different States, as a fall out of imposition of Minimum Alternative Tax and uncertainty over continuation of tax sops to special economic zones. Along with this, BoA has also extended the time for 45 developers for completion of their projects.
The developers which got additional time of completion of their projects include Rahejas, Mukhesh Ambani promoted Navi Mumbai and GP Realtors to implement their projects. Many notified SEZ projects are being delayed on the problems of land acquisition and uncertainty over the tax structure.
The reality company Parsvnath group has withdrawn its SEZs projects in different sectors like handicraft, gems and jewellery, food processing and automobile components. These projects were supposed to come up in Utter Pradesh, Rajasthan, Haryana, Maharashtra and Tamil Nadu. Other SEZ developers who wanted to give up their projects were Juventus Builders and Developers, Alok Infrastructure, Oval Developers, Airmid Developers and NG Realty.
The reality company Parsvnath group was among the other SEZ developers who had asked for a drop in their projects because of uncertainty over the issue of tax policy. In the draft Direct Tax Code (DTC) the government has recommended the withdrawal of tax exemptions for new units which will come up after the implementation of DTC and replacement of tax exemptions on profits for developers with sops on investments. The DTC is expected to implement from next financial year. The developers are also worried over the issue of implementation of Minimum Alternate Tax (MAT) of 18.5 % on the book profits of SEZ developers and units.
Under the SEZ act, SEZ units get 100% tax exemption on profits made for the first 5 years and 50% exemption for next five years and another 50% exemption on re-invested profits in the following 5 years. And on the other hand, SEZ developers would get 100% tax exemption on profits for 10 years, which SEZ developers may choose to block of the first 15 years.
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