Benefits will not be available to export processing zones converted to SEZs
The benefits for special economic zones (SEZs), announced by Finance Minister Jaswant Singh last week, will not be available to the export processing zones that have been converted into special economic zones.
Senior government officials said the benefits had been extended only to new projects set up after April 1.
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Eight old export promotion zones, which were converted into special economic zones, would not get the sops, they said.
Benefits under Section 80HHC of the Income-Tax Act, which has a sunset clause and will be available only this fiscal, will, however, be also available to the eight existing government-promoted special economic zones, the officials said.
As part of amendments to the Finance Bill 2003, the finance minister had announced a 100 per cent deduction of profits for five consecutive assessment years for special economic zone units.
He also said the units would be given a reinvestment allowance of 50 per cent of profits ploughed back.
The restriction on carry-forward of business losses and unabsorbed depreciation of these units have been lifted.
Sales from the domestic tariff area to these units have been accorded an export status and they will enjoy tax benefits under Section 80HHC of the Income-Tax Act.
There were over 650 units in the eight existing zones, which posted a cumulative turnover of around Rs 7,500 crore during April-December 2002.
The commerce ministry has cleared 17 projects promoted by private companies and state governments, which are under various stages of implementation.
The first new special economic zone at Pithampur near Indore will be operational this month. The next zone is slated to be in Jaipur.
Both zones have been developed by respective state governments and will be eligible for the benefits announced by Singh last week.