Reduction in land area requirement to be game changer for SEZs

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SummarySEZs, once a major attraction for investors, lost their sheen following economic slowdown, adverse tax changes.

with each other, including related ancillary services and research and development services of the sector. This much-desired sectoral broadbanding would lead to clustering of similar units in the same area, thereby achieving economies of scale and reduction of operational cost for the industry as a whole.

Presently, the SEZ policy only allows for vacant or parcels of land with pre-existing structures, not in commercial use, to be considered as vacant land for the purpose of notifying the SEZ. As per the new reforms, any development or upgradation to pre-existing structures which has been subsequently added in the SEZ would be eligible for duty benefits similar to any other activity therein. Authorised operations carried on in such infrastructure would also be eligible for duty benefits in accordance with the law.

This fine-tuning of the SEZ policy provides a breather for this sector, which has been severely impacted after the dilution of tax benefits and ability to get funding from banks.

The author is tax partner, EY. Views expressed are personal

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