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Hello,

India is taking a new step in the financial arena since last budget. But in the sector of SEZ, the government should provide a stable policy framework coupled with incentives to encourage more investments in special economic zones (SEZs). The Minimum Alternate Tax (MAT) has discouraged investments as the industry has been expressing concern over the tax imposition on the book profits of SEZ developers and units. Therefore, there is a need for stable policy with long term incentives.

In this present scenario major SEZ developers are concerned about the deadline for profit-linked deductions with introduction of the Direct Tax Code (DTC) from April 1, 2013. The code, which will replace existing Indian Income Tax Act 1961, intends to cut tax rates to bring more people and companies under the tax net, phase out profit linked exemptions for companies and replace them with investment linked incentives. Under the SEZ Act, SEZ units get 100 per cent tax exemption on profits earned in the first five years of operation, a 50 per cent exemption for the next five years and another 50 percent exemption on re-invested profits in the following five years. SEZ developers, on the other hand, get 100 per cent tax exemption on profits for 10 years, which they can choose to invoke within the first 15 years of operation.

This step of government gives us a clear signal that they are not much keen to promote the SEZ policy in India which is a matter of great concern for the national and global investors. We can only hope that in near future our government will change its approach.

On the ending note, I want to introduce the new look of SEZ Horizon. We know that change is the only constant thing in this world. So we are changing for a good cause. Hope that our government will do the same.

Please send your feedback at debarati@sezindiainvest.com

Thanks and regards,
Debarati Chakraborty
Editor-in-chief
SEZ Horizon

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