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Tuesday, June 25, 2013

Soon SEZ will be a thing of past

Soon Special Economic zone (SEZ) will be a thing of past as government is planning to do away with SEZ because of a lot of scams. This was the biggest programme to develop the industries by giving them many benefits in 2006.

This only means of developing new SEZ as the existing will remain operational and the land allotted to developer may permit to use on different purpose.

The government also collected data of SEZ success rate as commerce ministry asked Promotion Council for EoUs and SEZs ( EPCES) to give all the data about SEZ success and failure. The ministry gives sic month time to the council for presenting the report.

The main problem is between commerce and finance ministry as finance ministry believes some data over showed of export as well as jobs provided by SEZ.

As per senior commerce department official “There has always been some tension between the two ministries over the success of SEZs. So, we are doing a study by a neutral organization on whether it has been able to measure up to its objectives. Else, we see no point in continuing with this scheme and giving them tax subsidies,”

SEZ problems start arising in 2011-12 when Minimum Alternate tax was imposed on SEZ as well as Dividend Distribution Tax (DDT) on developers.

However the commerce ministry also feels that the existing SEZ going very well as they hold almost 30% part of export and grew at the rate of 30% in financial year 2012-13 where total export of India decreased for the same year. As per latest data of 31 March 2013, SEZ has provided over 10 lakh jobs.

At present around 170 SEZ are operating whereas government approved 577 and out of them 380 notified.
Exemptions of income tax-However SEZ has many exemption but the most of it are exemption in income tax and excise duty. Under Section 10AA of the I- T Act, SEZ units enjoy 100% I- T exemption on export income for first five years, 50% for next five years, and 50% of ploughed- back export profit for the next five years Hit to exchequer.


The moral of the story is government needs money. It doesn’t care of domestic industries, job provided or export figures. It needs money through excise duty and income tax which only can fill their pockets.

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