The Revised Direct Taxes Code has provided for investment-linked tax benefits for SEZ developers instead of profit linked tax benefits. Will this hamper the growth of SEZs in India?

N. Asokan, Chennai

I think it is a good move and consistent with the Government's stand that investments should be prodded with investment-based incentives, rather than with profit-based ones, as hitherto. Steps have already been taken in this regard. To wit, with a view to encouraging oil/gas pipeline companies, they have been given a 100 per cent depreciation of their capital expenditure in the very first year instead of having to wait for depreciation in trickles. Such accelerated depreciation would reduce the tax bill and allow carry forward of losses in case the profits are not sufficient to absorb the generous depreciation entitlement. The same has been provided for the cold storage industry as well.

S.MURLIDHARAN

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(This article was published in the Business Line print edition dated July 26, 2010)
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