Budget 2018: The Narendra Modi government has to take tough decisions pertaining to SEZs in the upcoming Budget 2018 as SEZs are facing quite a few challenges in recent times.
Budget 2018: Special Economic Zones (SEZs) were devised to boost the country’s industrial and export promotion policy. Now the Narendra Modi government has to take tough decisions pertaining to SEZs in the upcoming Budget 2018 as SEZs are facing quite a few challenges in recent times. Finance Minister Arun Jaitley should address the issue in Budget 2018 on February 1, the Institute of Chartered Accountants of India (ICAI) has suggested. “Section 50 of SEZ Act, 2005 provides that the State Government may, for the purposes of giving effect to the provisions of this Act, notify policies for Developers and Units and take suitable steps for enactment of any law:- (a) granting exemption from the State taxes, levies and duties to the Developer or the entrepreneur. (b) delegating the powers conferred upon any person or authority under any State Act to the Development Commissioner in relation to the Developer or the entrepreneur,” the Chartered Accountants’ body said.
The renowned body has said, “Presently, as the above provisions are discretionary, there is no mechanism to regulate the state governments in extending concessions to SEZ as envisaged in SEZ Act and Rules. Due to lack of coordination between central and state governments the concessions like the supply of goods without payment of CST is being denied by many state governments resulting in an added cost to such units.” It has suggested the government to make necessary changes in the Budget 2018.
The ICAI has made suggestions that aforementioned these provisions be made mandatory in the Budget 2018 by amending Section: 51 of the SEZ Act to provide that the provisions of this Act shall have effect notwithstanding anything contained in any state tax laws.
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On November 28, 2014, the Comptroller and Auditor General stated in its report on SEZs: “Considering the significant shortfalls in achievement of the intended socio-economic objectives by all the sectors of SEZs, there is an urgent need for the government to review the factors hindering the growth of non-operational and under-performing zones”, according to reports
According to reports, SEZ is an enclave area that is deemed to be a territory outside the customs territory of India for its authorised operations. The Centre’s Foreign Trade Policy 2004-2009 stated: “SEZs are growth engines that can boost manufacturing, augment exports and generate employment. The private sector has been actively associated with the development of SEZs. The SEZs require special fiscal and regulatory regime in order to impart a hassle-free operational regime encompassing the state-of-the-art infrastructure and support services.”