Journalism of Courage
The finance ministry has shot down the commerce ministry’s proposal to withdraw the minimum alternate tax (MAT) and dividend distribution tax (DDT) on developers of special economic zones, saying that it would bleed the exchequer dry by Rs 15,000 crore every year.
Commerce secretary Rajeev Kher had, on July 10, written to revenue secretary Shaktikanta Das seeking withdrawal of the taxes as part of moves to restore investors’ confidence in developing SEZs. Kher argued that credits of MAT, imposed on SEZs in Budget FY12, were unworkable and it has “the unintended consequence of impairing capital formation in the economy, particularly SEZs given the high growth of capital formulation witnessed.” Every SEZ developer is liable to pay MAT at the rate of 18.5 per cent plus applicable surcharge and cess on book profits. However, the revenue secretary, in his reply on August 11 said that MAT was introduced to address inequity in taxation of corporate taxpayers and to promote inter-se equity among them.
On DDT, he said that as the tax is levied on a company which makes profits and distributes dividend to its shareholders, there is no justification of exempting the SEZ developers from its payment. “The removal of DDT may also result in revenue loss of around Rs 3,000 crore per annum. In the light of the above adverse revenue effect, it would not be feasible to accept the request,” Das said.
Time limit fixed for disposal of special economic zone related activities
ENS Economic Bureau
NEW DELHI, August 13
The Centre on Wednesday prescribed a comprehensive timeline for disposing of various activities related to special economic zones to ensure ease of doing business.
According to a statement released by the commerce ministry, “This will work as a catalyst in providing good governance in the SEZs. These timelines will be strictly followed by all zonal development commissioners throughout India.”
As per the notification, time limit for examination of the proposals, including inspection of land and processing of the proposal for consideration by board of approval (BoA) 15 days, while examination and forwarding the proposal for approval of co-developer of SEZ for consideration by BoA should take 15 days.
Hitendra Mehta, partner, Vaish Associates, said that while the step conveys the message of time-bound solutions offered by SEZs, “had they also provided for a provision of deemed approval, it would have lent more credibility to their action”. The time limit fixed to clear the proposal of the SEZ developers for approval of list of materials and services to carry on authorised operations is 30 days.
Similarly, timeline for examination of the application for setting up of SEZ units is 15 days.
The statement said that the timelines will have to be prominently displayed through notice boards in all development commissioner offices. An official explained that the timelines are essentially to do away with the practice of deferring proposals and issues.
“The meeting of both unit approval committee and board of approval committee takes place at irregular intervals, delaying the decision on matters. Further, the inter-departmental single-window clearance is also not functional the way it should be. This is therefore a step in right direction,” the official said.
