Amiti Sen, New Delhi
The Economic Times
The announcement on the extension of the tax sop is expected to be made soon. Once the extension is notified, SEZ developers and units will be relieved from paying service tax on a number of areas like port-handling, inland transportation, courier and banking.
The Centre is also working on certain additional incentives for SEZs. These may include benefit of input duty reimbursement schemes (drawback and DEPB) for supply of goods from domestic tariff area (DTA) to SEZ developers. “The finance and commerce ministries have reached an agreement on exempting SEZs from paying service tax on authorised services availed outside the zones. The announcement is likely to be made shortly,” a source said.
SEZ unit owners and developers have been demanding that they should be exempted from paying 12% service tax on authorised services that are provided outside the zone. The commerce department, pushing the case, argued that the SEZ Act already provides for exemptions for services consumed either inside or outside an SEZ as long as it is for an authorised operation within an SEZ. The finance department was not providing exemption on services consumed outside the zone as it was misinterpreting the Act, it said.
“As long as the service availed by the developer or unit falls within the list of activities authorised by the government, it should not matter whether it is rendered inside the SEZ or outside,” the source said. The finance ministry seems to have finally agreed to the suggestion.
The Centre may also favourably rule on the proposal to give benefit of input duty reimbursement schemes like duty drawback and DEPB schemes to supply of goods from outside SEZ to units in SEZ and developers. Since SEZ is considered a foreign territory, the commerce department had said that sales to SEZs should be considered as exports and be eligible for drawback and DEPB benefits. “The proposal is being looked at and may also be given the green signal,” the source said.
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