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Prime Minister Narendra Modi is scheduled to meet the Secretaries of Commerce and Revenue on Saturday, to discuss issues pertaining to Special Economic Zones (SEZs), including restoration of tax benefits, among others.
Modi met Commerce Minister Nirmala Sitharaman on Friday to get an update on concerns of the Indian industry based on her discussions with business organisations.
The two also discussed tracking of prices of important commodities such as onions and milk to prevent sharp increases, a Government official told Business Line .
The Commerce Ministry has already started talks with the Finance Ministry on doing away with Minimum Alternate Tax of 18. 5 per cent and Dividend Distribution Tax of 10 per cent, which were imposed on SEZ units in 2011-12 despite the SEZ Rules promising tax holidays for specified periods.
Since the Finance and Commerce Ministries have been on different pages on the issue of taxing SEZs, the Prime Minister’s idea of holding a meeting with Revenue Secretary Rajiv Takru and Commerce Secretary Rajeev Kher is to help the two sort out their differences face to face, the official said.
While the Commerce Ministry had resisted the taxation move since inception arguing that it would affect investor confidence, the Finance Ministry had said that the exemption was leading to revenue loss.
Investments in SEZs have gone down sharply as a result of the taxes and a large number of investors have opted out of their approved zones or reduced the sizes of the zones.
The Commerce Ministry is also in favour of extending all sops, including incentives under Focus Product and Focus Market schemes, which are available to exporters outside the SEZs to units in the zones as well.
The PMO also wants the Commerce Ministry to keep a close watch on prices of sensitive commodities such as onions, milk and pulses. While the Commerce Ministry has not yet taken any action to stop exports, especially of onions, Commerce Secretary Rajeev Kher had said on Thursday that monitoring was happening on a daily basis.
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