With the SEZ Act and Income Tax Act providing varying definitions of 'exports' for the purpose of availing tax benefits, Assocham has asked the government to remove the anomaly, besides providing greater clarity on issues like service tax for benefit of the developer.
In a representation to the government, the chamber said under the SEZ Act 2005, exports have been defined as supply of goods or services from one unit to another unit or developer, in the same or different SEZ.
However, in the Income-Tax Act 1961, export in relation to SEZ means taking goods or providing services out of India from a SEZ by land, sea, air or any other mode, whether physical or otherwise.
"Due to this inconsistency, export by units under SEZs would not qualify for income tax exemption under Section 10AA of the Income-Tax. This anomaly needs to be corrected and there needs to be harmonisation in the two Acts to help SEZ units avail the tax exemption," Assocham President Sajjan Jindal said.
It further said as per the Finance Act 1994, services provided by SEZ developer or unit to the Domestic Tariff Area would not be regarded as import of services.
"More clarity is needed in terms of service tax implication in SEZs. Whether service tax would be paid by the SEZ developer or unit or the same would be paid by the service recipient under reverse charged method should be clear," he said.
