Ministries at loggerheads over SEZ issue

Maharashtra government's finance ministry and industry ministry are at loggerheads over the issue of giving tax exemption to the activities in the non-core area of the Special Economic Zones (SEZ).

According to the state finance ministry estimates, for every three hectare of the SEZ, state will loose taxes worth Rs 1 crore, as cement, steel and other material used for development of SEZ will be exempted from taxes.

The 10 multi-product SEZs are coming up in the state which cover more than 20,000 hectares of land, where in non-core areas of the SEZ, development of malls, multiplexes, housing colonies, among others will be allowed.

Presently, state government's law on SEZ is being scrutinised by the Central government and once it is okayed, approval of the state cabinet will be required once again before it could be presented in the legislature. And at this stage, we will take up this issue and oppose extension of tax exemptions to non core areas of the SEZ, said sources in the finance ministry.

However, industry department finds these fears unwarranted. A senior official from industry ministry said, "we will be giving exemption to those activities, which are essential for running of the SEZ and approved by the Central government".

If one goes through the decisions of Board of Approval (BoA) in the case of SEZs in some other states, then one can find that, they have not even approved of extending tax exemptions to development of port in the SEZ or convention centre.

So, there is no need to panic and assume activities like malls, residential complexes etc and we will get tax exemption from Central government, sources from industry department pointed out.

A former MP and member of BJP¿s national executive Kirit Somaya has demanded for codification of tax concessions given to SEZs Under SEZ Act by the Centre.

Speaking to Business Standard, Somaya said "I have written a letter to chief minister and expressed fear that, due to lack of clarity on this issue there is likelihood that, state government will loose around Rs 17,500 crore as a tax revenue".