Finmin pitches for tax incentives to Special Economic Zones

The Union finance ministry is likely to suggest curtailing the Minimum Alternate Tax (MAT) on Special Economic Zone (SEZ) developers to 7.5% from the current 18.5% during a joint interaction with the commerce ministry under the aegis of the Prime Minister Office (PMO).

Nripendra Mishra, principal secretary to the prime minister, will soon meet the revenue secretary and the commerce secretary on the matter as manufacturing push is one of the key agendas of Prime Minister Narendra Modi.

A senior finance ministry official told dna, "We will make a case for not doing away with the MAT on SEZ developers owing to the revenue implications. The point is curtail it up to 7.5% levels and make a roadmap for further rollback as the fiscal situation improves."

The meeting scheduled between the PMO, commerce and revenue departments slated for last Saturday could not take place as revenue secretary Rajiv Takru got marching orders. Takru has been shifted to the department for development of North East Region.

While Shaktikant Das has taken over as new revenue secretary, fresh date for the inter-ministerial MAT deliberations supervised by the PMO has not yet been decided.

The commerce ministry, meanwhile, is formulating a case for full exemption to SEZs from MAT as well as Dividend Distribution Tax (DDT) net. The presentation essentially captures how the SEZ story has been strangulated in the past eight years owing to imposition of taxes on the units, which should have actually got incentives.

According to the commerce ministry, of the 48,000 hectares land notified for the SEZs, only 37%, i.e. 17,700 hectares have been utilised till date. The scheme was launched in 2006.

Among the other things that the commerce ministry is likely to demand from the finance ministry in the upcoming budget are more allocations for the Delhi Mumbai Industrial Corridor (DMIC).