The commerce ministry is proposing a number of direct and oblique incentives reminiscent of deferral of import duties and exemption from export taxes to revamp Particular Financial Zones by means of a brand new laws, an official stated.
Within the Union Finances this yr, the federal government proposed to interchange the prevailing regulation governing Particular Financial Zones (SEZs) with a brand new laws to allow states to turn out to be companions in ‘Improvement of Enterprise and Service Hubs’ (DESH).
The official stated the commerce ministry has sought views of various ministries, together with finance, on the brand new invoice.
After collating the suggestions, the ministry would search approval of the Cupboard after which introduce the brand new invoice in Parliament.
The proposals search to supply incentives reminiscent of retention of zero-rating of IGST (built-in items and providers tax) on home procurement by a unit in an SEZ; continuation of oblique tax advantages to builders of those zones; and permitting depreciation on sale of used capital items cleared to home tariff areas.
There’s additionally a plan to increase the company tax fee to fifteen per cent with none exemptions for models enterprise authorised operations in these growth hubs.
States may present assist measures to those zones to spice up manufacturing and job creation.
The present SEZ Act was enacted in 2006 with an intention to create export hubs and enhance manufacturing within the nation. Nonetheless, these zones began shedding their sheen after imposition of minimal alternate tax and introduction of sundown clause for elimination of tax incentives.
These zones are handled as international entities when it comes to provisions associated to customs. Trade has repeatedly demanded continuation of tax advantages offered beneath the regulation. Items in SEZs used to take pleasure in 100 per cent revenue tax exemption on export revenue for the primary 5 years, 50 per cent for the following 5 years and 50 per cent of the ploughed again export revenue for an additional 5 years.
Within the Finances 2016-17, the federal government had introduced that the revenue tax advantages to new SEZ models can be obtainable to solely these models which start exercise earlier than March 31, 2020.
As on June 30, 2022, the federal government has given formal approvals to 425 SEZ builders, out of which 268 are operational. These zones have attracted about Rs 6.5 lakh crore investments and make use of about 27 lakh individuals.
Throughout April-June this fiscal, exports from these zones rose by 32 per cent to about Rs 2.9 lakh crore. It was about Rs 10 lakh crore in 2021-22 as in comparison with Rs 7.6 lakh crore in 2020-21.
Presenting the Finances 2022-23 , Finance Minister Nirmala Sitharaman had stated: “The Particular Financial Zones Act will likely be changed with a brand new laws that may allow the states to turn out to be companions in Improvement of Enterprise and Service Hubs.”
This could cowl all giant current and new industrial enclaves to optimally utilise obtainable infrastructure and improve competitiveness of exports.
(Solely the headline and film of this report could have been reworked by the Enterprise Customary workers; the remainder of the content material is auto-generated from a syndicated feed.)