EPCES TO HOLD OPEN HOUSE WITH COMMERCE SECY ON SEPT 4

Thesynergyonline Economic Bureau

NEW DELHI, AUG 27 :
THE Export Promotion Counci for EOUs and SEZs (EPCES) is organizing an open house of EOUs, SEZ Units and SEZ Developers on September 4 at Kolkata for resolving the issues of EOUs and SEZs . This was informed here by Mr L.B. Singhal, Director General, (EPCES). Mr G.K. Pillai, Commerce Secretary is chairing this open house which will be attended by Development Commissioners of Special Economic Zones, senior officials of Ministry of Commerce, Ministry of Finance, Director General of Foreign Trade, Director General (Export Promotion), Department of Revene, CBEC, CBDT as well as officials of RBI and State Government of West Bengal.

He further informed that EPCES has so far organized 28 open houses of EOUs, SEZ Units and SEZ Developers with the Commerce & Industry Minister, Government of India and Commerce Secretary, Government of India and other senior officers from Central and concerned State Governments all over India at New Delhi, Mumbai, Chennai, Kolkata, Ahmedabad, Hyderabad, Coimbatore, Surat, Ludhiana, Bangalore, Kandla etc. As a result of these open houses, a number of issues have been resolved.

Mr Singhal also informed that the last open house meet was organized by the Council with Mr G.K. Pillai, Commerce Secretary on June 20, 2008 at Mumbai. The open house was attended by Principal Secretary (Industry), Government of Maharashtra and Muncipal Commissiner of Mumbai. As a follow-up of this open house in Mumbai, the following issues have been resolved:

- Power to decide manner of fencing and number of entry and exit points in respect of IT/ITES SEZs, delegated to Development Commissioners. (Circular issued by Ministry of Commerce & Industry).

- Time frame for disposal of various activities in SEZ. (Circular
issued by Ministry of Commerce & Industry).

- Direction for making available Form I to the SEZ Developers.
(Circular issued by Ministry of Commerce & Industry).

- Clarification regarding processing and non-processing area in the
Zone. (Clarification issued by Ministry of Commerce & Industry).

- Directions to STPIs. (Directions issued by Ministry of Commerce &
Industry).

ASSOCHAM SEEKS HARMONISATION IN EXPORTS DEFINITIONS OF SEZ ACT 05 , IT ACT 1961

Thesynergyonline Economic Bureau

NEW DELHI, AUG 23 :
IN a bid to avoid inconsistency in `exports definition’ under SEZ Act 2005 and Income-Tax Act 1961 that disqualify SEZ units to claim income-tax exemption under Section 10A of Income-Tax Act 1961, The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has suggested harmonization in definition of `exports’ under two Acts.

In a representation submitted to the government, the Chamber has pointed out that the SEZ Act 2005 under Section 2(m)(iii) provides that `export’ means supplying goods or providing services from one unit to another unit or developer, in the same or different SEZ.

Whereas the Income-Tax 1961 under the Explanation of Section 10AA provides that `export in relation to SEZ’ means taking goods or providing services out of India from a SEZ by land, sea, air or any other mode, whether physical or otherwise.

`Because of this inconsistency, export by units under the SEZ would not qualify for Income-tax exemption under Section 10AA of the Income-Tax 1961 and therefore this anomaly needs to be corrected so that harmonization in two Acts is effected to help SEZ units avail of income-tax exemption, said ASSOCHAM President, Mr. Sajjan Jindal.

The Chamber has also sought more clarity in the definition of `services’ under the SEZ Act 2005 as legal accounting services are not clearly defined and currently cause ambiguity.

The ASSOCHAM has also sought host of other facilities for spread of SEZ activities by emphasizing that procedure for selling of land to SEZ developers be simplified and special status be given to them for fund raising through IPOs etc.

Mr. Jindal pointed out that the RBI classification of loans to SEZ developers needs to be further made business friendly in the sense that it should be put under “Infrastructure” category and not as that of real estate category.

The Chamber has suggested for adoption of joint strategic alliances by centre and states as per which SEZ developers be invited to put up economic activities in insurgency prone areas for employment generation and prevent youths from taking up to militant activities.

The ASSOCHAM has recommended that SEZs are badly required to be created in Telengana, Bodoland, Chambhal Valley and naxal dominated belts of Jharkhand, West Bengal and part of Bihar so that their employment prospects increase and youths are encouraged towards taking up to creative activities.

It could be possible, provided centre and concerned states meet up for a joint strategic alliance and come out with incentives and then invite SEZ developers to put their activities in such area to uplift them socially, economically and industrially, said Mr. Jindal.

The ASSOCHAM Paper has further pointed out that the Finance Act, 1994 under section 66A states that services provided by SEZ Developer/ Unit to DTA would not be regarded as import of services. More clarity is needed in terms of service tax implication in SEZs. Whether service tax would be paid by the SEZ Developer/ Unit or the same would be paid by
the service recipient under “reverse charged method”.

The EGOM on SEZs have imposed an upper cap of 5,000 hectares for multi-product SEZs in the country. It is a balanced decision,
considering the current political scenario. The Chamber has suggested that the government should keep a flexible approach to the issue, and should not be closed to the idea of further liberalizing this upper-cap on merits and case-to-case basis. SEZ developers in all over the world agree that bigger the scale is, better the project is. The Chinese experience is a living manifestation of this. The Hainan SEZ in China alone covers an area of 34,000 sq. km.