Revenue, commerce secys home in on SEZ for tax

The secretaries of commerce and revenue departments discussed the long pending issues of withdrawal of tax concessions to special economic zones (SEZs) in the direct tax codes (DTC). Union commerce secretary Rahul Kullar, told the press that he and his peers had a meeting on Wednesday, but he refused to divulge any details of the outcome. "It is too early to make inferences", he said.

The proposed DTC has sought to end the tax exemptions to SEZs. The draft of the DTC proposal was put up for public debate and scrutiny. The draft clearly states that the profit-linked deductions distort and create an incentive to inflate profits as well as transfer profits from a taxable entity to a non-taxable one. The SEZs also have the incentive to evade and avoid tax, the draft explained.

The government has allowed units already operating in SEZs to avail of tax benefits for the unexpired period. Tax benefits for SEZs are usually given for 15 years. But many SEZs are still under construction even though they have got the approval from the government a long time ago.