SEZs may get tax relief in Budget

The government may give the dying Special Economic Zones (SEZs) a new lease of life by giving tax benefits to them in order to boost the manufacturing and exports.

There is buzz that the government might cut the minimum alternate tax (MAT) and dividend distribution tax (DDT) 10 per cent each to increase production through SEZs. Currently, MAT is imposed at 20 per cent and DDT at 16.22 per cent on SEZs.

Additionally, the Commerce Ministry is also lobbying against the proposed sunset clause for SEZs as  it would hurt exports and job creation by these unit. This comes on the back of the government looking at a gradual withdrawal of tax exemptions to various sectors, including SEZs.

The Central Board of Direct Taxes (CBDT) had last year proposed removal of facilities and incentives to SEZs by March 31, 2017. The Export Promotion Council for EOUs and SEZs (EPCES) too feels that the government should not withdraw any tax incentives from SEZs as it might hit exports and job creation.

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