×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

No tax sops for shifting old machinery to SEZs

No tax sops for shifting old machinery to SEZs
Comment E-mail Print Share
First Published: Sun, Mar 25 2007. 11 26 AM IST
Updated: Sun, Mar 25 2007. 11 26 AM IST
PTI
New Delhi: The Finance Ministry has made it tough for companies to migrate equipment to Special Economic Zones (SEZs) by disallowing tax sops to those importing or shifting second-hand machinery from outside the SEZs.
These tax concessions are allowed under the SEZ Rules of the Commerce Ministry.
But the North Block, which has all along maintained that SEZs will result in revenue loss of Rs100,000 crore in next four years, as provided in the Finance Bill that tax concessions under Section 10AA of Income Tax Act would not be extended to any unit formed by transfer of old machinery.
“Section 10AA (providing for tax sops) is applicable to any undertaking that fulfills the condition of not formed by transfer to a new business of machinery or plant previously used for any purpose,” the memorandum explaining the provisions of Finance Bill said.
The new provision runs contrary to SEZ Rules of Commerce Ministry.
“A unit or developer may import or procure all type of goods including capital goods (new or second hand) from DTA without payment of taxes or cess,” the Rule 27 pertaining to the SEZ Act states.
Commerce Ministry has all along been defending itself against the charge that existing units in DTA would shift to SEZs for tax concessions, saying this was not allowed.
The Finance Bill is emphatic on plugging the revenue leakages through shifting of units to SEZs.
“SEZs are intended to promote new industry and invesment and not to facilitate migration of existing industries to avail of tax concession,” the Memorandum has said.
Comment E-mail Print Share
First Published: Sun, Mar 25 2007. 11 26 AM IST