The government should consider withdrawal of Minimum Alternative Tax (MAT) on the tax free zones to give a boost to the sector and exports, Industry body Assocham said today.
In 2010-11, the government had imposed the Minimum Alternative Tax (MAT) and Dividend Distribution Tax (DDT) on special economic zones (SEZs), which were earlier exempted from almost all levies.
The chamber has suggested withdrawal of MAT to extend benefits to SEZ units as envisaged by the SEZ Act.
"The imposition of minimum alternate tax on special economic zones has completely jeopardised the basic concept and intention of establishing an SEZ unit," Assocham President Rajkumar Dhoot said.
MAT imposition will make SEZ units unattractive as incentives available outside will outweigh the tax benefits offered to an SEZ unit, he added.
In view of the current economic scenario, Assocham said, there is a need to re-look at the policy provisions to induce confidence in the investors.
Out of 588 SEZs formally approved, about 161 are operational.
As of September 2012, total investments made in these zones is Rs 2.19 lakh crore and 8.94 lakh employment have been generated.
