Gold & Silver

Commerce Ministry wants tax sops for SEZs, removal of import curbs on gold

Our Bureau New Delhi | Updated on June 11, 2014 Published on June 11, 2014

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Both issues may be addressed in the forthcoming Budget: Rajeev Kher

The Commerce Ministry has made a strong pitch for restoration of tax benefits to Special Economic Zones and removal of import restrictions on gold in the forthcoming Budget.

“We have been talking to the Finance Ministry for withdrawal of the minimum alternate tax and dividend distribution tax on SEZs and restoration of the situation as it was,” Commerce Secretary Rajeev Kher said at a press conference here on Wednesday.

The Ministry is also in favour of bringing down import duties on gold and restoring normalcy in import procedures as the current account deficit is much lower compared to last year, the Secretary added.

“The point is pretty well acknowledged (by the Finance Ministry). There is a clear perception that there is something that needs to be done,” he said.

The Centre had cracked down on gold imports last year raising import duties to 10 per cent and introducing restrictions through requirements such as the 80:20 scheme, whereby one-fifth of all gold imported into the country must be set aside for export. Normalising the methodology of operating the controversial 80:20 scheme of gold imports and bringing down import duties could be part of this year’s Budget, the Secretary added.

On the need for withdrawing MAT and DDT on SEZs, Kher said that various studies had shown that the imposition of taxes had hindered SEZs from acting as a tool for industrial development and increasing exports.

Restorative action

The Commerce Ministry is hopeful that some restorative action could be taken in the Budget to be announced next month.

The Finance Ministry, in the Budget for fiscal 2011-12, decided to introduce a minimum alternate tax of 18.5 per cent and a dividend distribution tax of 10 per cent on the zones putting an end to the tax holiday provided for in the SEZ policy.

The SEZ Act passed in 2005 promised units a five-year complete tax holiday on profits, followed by 50 per cent exemption on profits over the next five years. Developers are promised a tax holiday for 10 consecutive years that they can choose in a bracket of 15 years.

The Finance Ministry had argued that complete tax exemption was a big drain on the exchequer, but the withdrawal of tax benefits resulted in a drastic drop in investments into the zones.

Published on June 11, 2014
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