THIRUVANANTHAPURAM: While a section of the special economic zone (SEZ) promoters in Kerala were disappointed as their demand for scrapping the minimum alternative tax (MAT) was ignored by finance minister Arun Jaitley, others were optimistic after he spoke about reviving SEZ schemes. The Union commerce ministry's board of approval (BoA) on SEZs will meet on July 24.
But, industrial promoters here are not keen on SEZs. "There is no specific mention in the budget on tax cuts for SEZs. This indicates a revised policy and we do not know what will be granted. But there is lot of emphasis on the manufacturing sector and financial sector reforms such as tax administration and bank capitalization will further growth," said state planning board (SPB) chairman KM Chandrasekhar.
Confederation of Indian Industry- Kerala (CII) vice-chairman Harikrishnan R Nair said: "There's no push for exports, except some benefit for cotton exports and nothing in particular for SEZs. There is no word on scrapping MAT. A huge chunk of income generation is planned by imposing taxes and hike in prices. The government seems to have no other option." SPB member G Vijayaraghavan said, "The revival of SEZs should be seen in a positive way. It encourages startups in rural areas which would prevent overcrowding and lessen the cost of living in urban areas. It lays emphasis on manufacturing sector and green technology. Infrastructure Kerala Limited (InKel) MD T Balakrishnan said, "It is a good budget in terms of income tax exemption for manufacturing sector and support for infrastructure development including ports."
The Centre had approved 28 SEZs in Kerala five years ago, but many projects failed to take off and only 11 approved and notified SEZs remain. Among them three are functioning effectively, including a multi-product SEZ, the Infopark in Kochi and the Technopark in Thiruvananthapuram. "Others are partly functioning and can take off provided they get tax exemptions, land, and relaxation in regulations and clearances," he said. Though Kinfra's Film and Video Park and port-based SEZs are functioning, they are not fully-fledged. Earlier the Centre had given a 10-year tax holiday for SEZs as they compete with international SEZs. Later in the Budget 2007-08, MAT was extended to SEZs too. Industrial experts said that the tax payable through MAT is higher than the tax payable on computed income.