Commerce Ministry suggests reducing DDT and MAT in Budget

In its Budget proposal to the Finance Ministry, the Commerce Ministry has suggested for exemption or lowering of Dividend Distribution Tax (DDT) and Minimum Alternate Tax (MAT) on units and developers, as it was the biggest discouragement for investors who had been promised a tax holiday for the initial years of operation. The ministry said to lower MAT to at least 7.5 per cent from18.5 percent at present, so that exporters from SEZs are able to set off those advance tax MAT paid within the stipulated period and also as the government gets some revenue.

Commerce ministry has urged the finance ministry to permit Special Economic Zones (SEZs) units to sell in the domestic market by paying concessional import duties in line with what is paid by India’s Free Trade Agreement (FTA) partners. It has said this as it is concerned about the steady rise in de-notification of SEZs and increased delay in implementation of projects. The Commerce Ministry’s argument is that with fall in global demand and uncertainty gripping major economies, SEZ units should not be deprived from accessing the domestic market.

Meanwhile, Commerce Ministry has also made proposal to lowering of customs duties to be paid by SEZ units when they sell their goods in the domestic market by bringing it in line with the best rates offered to the country’s FTA partners.

Currently, there are 204 operational SEZs in the country with a total investment of Rs3, 63,112.46 crore and providing employment for 15, 44,526. In 2013-14, exports from SEZs was at $82.35 billion 8 per cent lower than the year before.