Economic Activity In SEZs Concern Over Tax Loss

New Delhi: The Department of Commerce continues to bet on high economic activity in special economic zones (SEZs) to counter concerns of likely enormous revenue loss from the tax incentives conferred on SEZ developers and units. It had submitted to the Parliamentary Standing Committee on Commerce, which went into the functioning of SEZs, that there would actually be a gain to the exchequer if the economic activity takes place as planned. The Department showed that there would be large indirect tax revenue for the Government by way of consumption by those employed in the units. This would outweigh the revenue loss of about Rs 90,000 crore earlier estimated by the revenue department. In its submission, the Department of Commerce noted that the Finance Ministry had pegged tax loss to the tune of Rs 90,000 crore. Forty per cent of the turnover is normally paid by way of wages and salaries.

Till date, about 128 SEZs have been notified and Rs 44,142 crore worth of investments made. Total exports from the notified zones are hoped to be about Rs 67,000 crore during 2007-08. Over the next four years, total investments in SEZs are hoped to be about Rs 3.6 lakh crore. The revenue department had last year pegged tax lossof about Rs 90,000 crore. With more SEZs now in the fray, the revenue department expected the losses to be much higher.