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New SEZ Bill to offer tax sops
December 07, 2004 12:56 IST
The government will come up with a legislation, which will have a fiscal package, including a 20-year income tax holiday for special economic zones, by December end, a top government official said on Tuesday.
"The government is working on a legislative framework and a fiscal package for SEZs to be put in place by December end," commerce secretary S N Menon said adding the draft bill had gone to the Law Ministry for vetting.
Speaking at the at the India Economic Summit, Menon said government proposed to further simplify the procedures for attracting foreign direct investment which will not require approval of foreign investment promotion board.
These, he said, would only need the nod of board of approval, which will be headed by additional secretary in the commerce ministry.
Approval for manufacturing and services units will be granted at the zonal level by approval committee headed by the development commissioner. The legislation provides for tax benefits like exemption from customs duty, excise duty besides income tax benefits for 20 years, he said.
Menon said the new legislation would also give complete freedom to developers to allocate space as well as infrastructure and services on commercial terms.
Highlighting the other features of the draft central legislation, he said the zones would continue in perpetuity and only in the case of mismanagement of services or insolvency of developer, an administrator might be appointed for up to one year for stability.
Menon said the government had given in-principle approval to 33 SEZs while five others, including Wipro's Salt Lake SEZ in West Bengal, two in Pondicherry and one in Bangalore were under consideration.
On Overseas Banking Units in SEZs, he said out of the approved 16, six had started functioning. The OBUs will get enhanced income tax benefits and will be exempt from priority sector lending.
Noting that states had to bring their own legislation, he said while Uttar Pradesh, Madhya Pradesh, Rajasthan and Gujarat had already enacted their SEZ law, Andhra Pradesh and Jharkhand were expected to do so soon.
Speaking on the occasion, Lew Syn Pau, chairman, Ascendas, Singapore, said he was looking at enhancing investment in India but conditions had to be conducive.
Highlighting the roadblocks affecting investments in SEZs, Lew, who heads one of the largest developer entities of Singapore, said stamp duty in the country was very high and there are few exit options apart from policy stipulations like 2000 units for residential development.
He also emphasised on the need for creation of a capital market for real estate.