The Commerce Ministry wants Finance Ministry to re-look at the taxation regime for the special economic zones (SEZs) in the forthcoming Budget to boost exports and investments. "In its Budget proposal, the Commerce Ministry wants the Finance Minister to discontinue minimum alternate tax (MAT) and dividend distribution tax (DDT) imposed on SEZ units and developers respectively," a senior official said.
Earlier too, the Commerce and Industry had recommended the restoration of original exemption from MAT and DDT to SEZ developers and units. But the Finance Ministry has rejected that. The official said that given the slow growth rate in exports and investments, "we have asked the Finance Minister to take re-look on the issue". SEZs, which contribute about 25 percent of the country's total exports, are facing problems after imposition of these taxes in 2011. The industry wants withdrawal of these taxes to revive investments sentiments. Over 50 developers have already surrendered their projects and another 57 have approached the government requesting for de-notification of their projects. Many have cited the reason of change in tax regime for surrendering their projects.