Parsvanth gets govt nod to pull out of six SEZs

The government has allowed realty major Parsvnath group to withdraw its six special economic zone (SEZ) projects in different states, as a fall out of imposition of Minimum Alternate Tax and uncertainty over continuation of tax sops to SEZ. The clearance for Parsvnath SEZ Ltd (PSL) to pull-out of its projects was given by the inter-ministerial Board of Approval, which met in the national capital under the chairmanship of Commerce Secretary Rahul Khullar.
Besides, the BoA permitted extension of time to 45 developers, including those of the Rahejas, Mukesh Ambani-promoted Navi Mumbai and GP Realtors to implement their projects. Several of the SEZ notified projects are grappling with the problems of land acquisition even as they face uncertainty over the tax regime, according to sources. The Parsvnath group has withdrawn its projects in different sectors like handicrafts, gems and jewellery, food processing and automobile components. These projects were to come up in Uttar Pradesh, Rajasthan, Haryana, Tamil Nadu and Maharashtra.
The SEZs which were touted as major vehicles for investment and export promotion were allowed a host of tax exemptions under a special SEZ Act of 2005. The initial phase saw developers lining up in big numbers for the projects. It was also seen as a real estate opportunity. However, following concerns about loss of tax revenue, by the Finance Ministry, the government has proposed phasing out of the tax sops for the units commencing operations after 2014. Moreover, farmers protests against land acquisition has become a major problem. 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 therein.
Under the law, incentives for SEZ units include 100 per cent income tax exemption on export profits earned for the first five years, a 50 per cent for the next five years and another 50 per cent exemption on re-invested profits in the following five years.