Industry body Assocham has sought continuation of income tax benefits available now to special economic zones (SEZs) under the proposed Direct Tax Code (DTC) regime that is expected to come into force from April 1, 2011.
In a note to Finance Minister Pranab Mukherjee, the chamber has underlined the need for continuation of the tax benefits to the SEZs under the DTC in the wake of apprehensions raised by certain developers that incentives which are currently enjoyed by them may be discontinued.
"SEZs schemes are special ones as their objective is to enhance India's share in global trade, attracting foreign and domestic investment and generating employment," Assocham said.
Therefore, the tax benefits to SEZs should not be discontinued, it added.
Under the SEZ Act, units in these zones are given 100 per cent tax exemption on their income for the first five years and 50 per cent in the next five years. Another 50 per cent exemption is given on the ploughed-back profits for five years after 10-years.
A total of 579 SEZs have been approved and 335 of them have been notified. Over 100 are currently operational.