The Andhra Pradesh government has exempted value added tax (VAT) on the sale of goods for certain purposes to any unit located in any special economic zone (SEZ). The government has amended the Andhra Pradesh Value Added Tax Act to that effect.
Sources said that the proposal was made in the overall national SEZ policy drafted by the Union government, that the goods sold to the SEZ for its establishment and maintenance need not pay sales tax.
"No tax shall be payable by any (registered) dealer in respect of sale of any goods made by such dealer to a registered dealer for the purpose of setting up operation, maintenance, manufacture, trading, production, processing, assembling, repairing, reconditioning, re-engineering, packaging in an unit located in any SEZ …," says the proposed section 7-A being inserted into the VAT Act through amendment. The amendment bill was approved by the state Assembly on Tuesday.
The State has about 70 SEZs have obtained approvals, while 46 SEZs have committed an investment of about Rs 32,000 crore. These include 33 IT and ITES SEZs spread across 15 districts in the State.
Further, the government also proposed an amendment enabling to deduct tax in full from the bills of works contractor, wherever a separate provision for tax at the rate of 4 percent is provided in the estimates in respect of works of government and local bodies. As of now, only 2.8 percent tax is being deducted while the contractor is provided 4 percent tax to the contractor over and above the estimates. This would reflect in the accounts of the government works including irrigation projects, source said
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