New Delhi: The draft direct tax code that would lead to the overhaul of the Income Tax Act, has created uncertainty among the developers of special economic zones over continuation of the tax sops.
"Draft Direct Tax Code has created uncertainty in the minds of SEZ developers, including international and domestic investors...," Export Promotion Council for EOUs and SEZs Director General L B Singhal said in the pre-budget proposals to the finance ministry.
Singhal said the finance ministry should immediately clarify how the developers and the units operating in these zones would continue to get tax benefits.
The SEZ units are given 100 per cent tax exemption on their income for the first five years, and 50 per cent in the next five years. Another 50 per cent deduction is given on the ploughed-back profits for five years after 10 years.
"If the position is not clarified immediately, this would result in delay of SEZ projects," Singhal said.
Discussion paper on the code provides that the provisions of the Income Tax Act, that allows profit-linked incentives and other tax incentives, would remain applicable even after the implementation of the code through its 'grand-fathering'.
PTI
First Published: Wednesday, December 23, 2009, 21:09