The Minimum Alternate Tax (MAT) imposed on special economic zones in the Union Budget triggered a lively debate and elicited divergent views and responses from the panelists at the Budget talk organised here on Friday by the Hindu-Business Line in association with Tata Photon Plus.
Mr O. Naresh Kumar, CEO of Symbiosys Technologies, a unit in the IT special economic zone at Rushikonda here, said what the Finance Minister did amounted to “changing the rules of the game in the middle of it.” The investments in IT SEZs were based on the promise and premise of 10-year tax exemptions and holiday offered by the Government, but the Finance Minister in the current deemed it fit to impose MAT at 18.5 per cent on the units. It amounted to going back on the word given, he said.
Mr Chandrasekhar Veeraghanta, Chartered Accountant, who spoke later, said that the Finance Minister's actions should be viewed in the light of his stated intention to move towards the direct taxes code from April 2012. “The imposition of MAT should be viewed in that perspective. I think the move is justified and the Finance Minister did a fine balancing act,” he remarked in his presentation. He said the levying of MAT may be harsh on the smaller IT units, but “on the whole I feel the industry is mature enough and stable enough to absorb the tax.”
During the interaction session that followed, a student pointed it out that the two speakers were speaking in different voices and sought a clarification. Mr Naresh Kumar clarified that in principle he was not against paying MAT or any other tax to the Government but had only objected to the imposition of the tax in violation of the promise given by the Government. “Once the Government formulates and states a policy, it is assumed by the industry that it holds good and the investments are made on the premise. But if afterwards, citing some reason, the Government takes a different stand, the industry is left in the lurch. That the Finanace Minister is seeking to move towards the direct tax code regime and has therefore imposed MAT on SEZs is in my view not a satisfactory explanation,” he said.
Prof Harinarayana, Pro Vice-Chancellor of Gitam University, made a presentation on the macro-economic aspects of the Budget. He said it may not be “as rosy and balanced as it appears” at a first glance. Not enough had been done to curb inflation, and the Budget lacked the long-term perspective. He felt inflation could not be blamed on rising rural prosperity and it was more of a supply chain management problem.
Mr G.V.L Satyakumar, Deputy Chairman of the Visakhapatnam Port Trust, said it was a finely balanced Budget and its focus was on infrastructure development.
Mr V. Ravindranath, advocate and tax consultant, explained about the Budget proposals relating to indirect taxes.
Mr T.V Suresh, Regional General Manager of The Hindu , Visakhapatnam, welcomed the guests.