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Commerce and industry and textiles minister Anand Sharma today told the Lok Sabha that the government is not considering the withdraw minimum alternate tax that was imposed on special economic zones in April last year.
“The proposal for review of imposition of Minimum Alternate Tax (MAT) was taken up by the Government and there has been no decision to reconsider the same at present,” Sharma said here today.
The proposal to impose 18.5% MAT on the book profits of both SEZ developers and units located inside these enclaves was announced by the then finance minister Pranab Mukherjee while presenting the budget for 2011-2012. It came into effect from April last year amidst severe protest from SEZ developers and units.
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Prior to this, SEZ developers and units were exempted from MAT as per Section 115JB(6) of the Income Tax Act, 1961. This has led to stalling of large-scale projects. On the other hand, developers were left completely high and dry, who have invested huge investments for the developing SEZ projects based on the tax incentives offered by the government under the SEZ Act.
Last week while presenting the annual supplement to the Foreign Trade Policy 2009-2014, Sharma had said that the decision to withdraw MAT lies entirely with the Ministry of Finance and that he does not have the “jurisdiction” to do so.
SEZ units are given 100% income tax exemption on export income under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.
Under section 10 AA of the IT Act SEZ units are given 100% income tax exemption on export income under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.
