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Government eyes Rs 15k crore via MAT on SEZs

Times of India

March 02, 2011

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NEW DELHI: The government hopes to plug a potential revenue loss of Rs 15,000 crore by levying minimum alternate tax on developers of special economic zones and units that are located in these enclaves.

With tax benefits available under the Software Technology Park of India (STPI) scheme coming to an end, the government fears that several information technology units could relocate themselves in SEZs to avoid paying tax. Alternatively, IT zones would come up before the Direct Taxes Code, which had proposed to end the tax holiday, kicks in. Unlike a multi-product SEZ, the area requirement is much lower, helping cut down construction time. In the Budget, the government has proposed to levy 18.5% minimum alternate tax on SEZ units and developers. When asked, revenue secretary Sunil Mitra said the proposal had an implication of Rs 15,000 crore. "Profit linked incentives are resulting in shifting (of units) to SEZs," he added.

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