L&T to scrap proposed Mumbai IT SEZ

Larsen and Toubro Ltd (L&T) is planning to scrap its proposed 25-acre information technology (IT) SEZ in Mumbai owing to the global economic slowdown and uncertainty over tax laws governing special economic zones (SEZs).

The commerce ministry’s board of approval for SEZs will take up L&T’s request for withdrawal at its June 8 meeting, according to the agenda of the meeting.

The agenda of the board meeting said, “Larsen and Toubro was granted formal approval for setting up of sector-specific SEZ for information technology and information technology-enabled services at Powai, Mumbai, Maharashtra, over an area of 10 hectares.”

The agenda attributed L&T’s change in stance to a changed “environment for the IT business, which is a fallout of global recession”, along with “uncertainty in?tax provisions”.

Under current laws, developers of SEZ units are eligible for tax benefits up to 10 years, while business units operating from SEZs are eligible for 100 per cent tax holiday for the first five years, and 50 per cent for the next 10 years where the benefit during the last five years is subject to conditions. These provisions will not be applicable after March 31.

IT firms have been trying to set up operations in SEZs as the tax holiday scheme for Software Technology Parks of India, introduced in 2000-01, will also expire on March 31.