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Commerce Ministry urges for removal of sunset clause for SEZs

22 Jan 2018 Evaluate

With a view to boost shipments and job creation, the Commerce Ministry has urged for continuation of tax incentives being enjoyed by units in special economic zones (SEZs) and also asked for removal of minimum alternate tax on SEZs. In the Budget 2016-17, Finance Minister Arun Jaitley had stated that income-tax benefits to new SEZ units would be available to only those units which commence activity before March 31, 2020. The Ministry wants the removal of this sunset clause as it would negatively impact the growth of these zones.

According to industry experts, the clause that indicates the date in advance on which tax incentives will cease to exist is a retrograde step and would impact investments and job creation in these zones. Export Promotion Council for EOUs and SEZs (EPCES) former Chairman Rahul Gupta has said that the sunset clause will impact investments. Projects, which would not be able to get completed by March 2020, may become unviable. So, the government should consider removing this.

Units in SEZs enjoy 100 percent income-tax exemption on export income for the first five years, 50 percent for the next five years thereafter and 50 per cent of the ploughed back export profit for another five years. SEZs, which emerged as major export hubs in the country, started losing their sheen after the imposition of minimum alternate tax and introduction of sunset clause. Besides, during April-September 2017-18, exports from these zones grew 13 percent to about Rs 2.67 lakh crore.

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