Scared of SEZ,Parsvnath drops projects

Realty cos are running scared of the tax they may have to pay.

Several realty firms,including Parsvnath,have sought the government8217;s nod to shelve their special economic zone SEZ projects amid continued tax uncertainties.

Among others,Parsvnath SEZ Ltd 8212; a Parsvnath Group subsidiary 8212; has offered to surrender six SEZs 8212; in Uttar Pradesh,Rajasthan,Haryana,Tamil Nadu and Maharashtra that had earlier been granted in-principle approval by the government.

8220;The developer has requested for withdrawal of in-principle approval,citing economic in realty market slowdown,Direct Tax Code DTC,imposition of minimum alternate tax MAT as the reason for the same,8221; an official in the Commerce Ministry said.

Parsvnaths8217; request for pulling out from the SEZ projects and other applications will come up before the inter-ministerial Board of Approval BoA,which is scheduled to meet on July 22.

Besides Parsvnath,other developers that want to exit from their SEZ projects include Juventus Builders and Developers,Alok Infrastructure,Oval Developers,Airmid Developers and NG Realty.

Parsvnath had got in-principle approval for leather and handicrafts SEZs at Agra and Moradabad,respectively,a gems and jewellery tax-free zone in Jaipur,a food processing SEZ in Sonepat,an auto component zone in Pune and a multi-product SEZ in Kanceepuram.

The draft DTC has proposed withdrawal of exemptions for new units that come up after the tax code is implemented and replacement of tax exemption on profits for developers with sops on investments.

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The DTC is expected to implemented from the next fiscal. The industry has also expressed concern over the imposition of Minimum Alternate Tax MAT of 18.5 per cent on the book profits of SEZ developers and units.

Under the SEZ Act,SEZ units get 100 per cent tax exemption on profits earned for the first five years,a 50 per cent exemption for the next five years and another 50 per cent exemption on re-invested profits in the following five years.

SEZ developers,on the other hand,get 100 per cent tax exemption on profits for ten years,which they can choose in the block of the first fifteen years.

Five developers have approached the BoA to de-notify their tax-free enclaves.

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In addition,as many as 45 SEZ developers,including Raheja SEZ,Navi Mumbai and GP Realtors,have sought more time to execute their projects.

SEZs in India have emerged as manufacturing and export bases.

Meanwhile,two developers 8212; Radiant Corporation and Anique Infrastructure 8212; have requested permission to set up new tax-free enclaves in Andhra Pradesh and Gujarat,respectively.

Exports from SEZs increased by 43 per cent to Rs 3,15,868 crore in 2010-11 vis-a-vis the same period of the previous fiscal. A total of 6.76 crore jobs were also generated.

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