The government today said developers of special economic zones as well as units therein will continue to get incentives like income tax exemption under the proposed direct tax code (DTC).
"The provision to protect profit-linked deductions of units already operating in SEZs for the unexpired period will be incorporated (in the DTC)," the revised DTC released by the Finance Ministry said.
The proposals in the first draft released last August had created confusion, as tax exemptions were restricted to the developers of SEZ and not the units in them. The fresh DTC sought to remove this uncertainty.
Units in SEZs get 100 per cent income tax exemption on export income for the first five years, 50 per cent for the next five years.
They also get exemption on 50 per cent of the ploughed back export profit for the next five years after the first 10 years. They are also exempted from MAT.
Following the release of draft DTC last year, scores of SEZ units and developers had raised concerns that the zones were attractive due to the tax sops and their withdrawal would drive away future investors.
KPMG executive director Hemal Zobalia said, "thus, now even the existing SEZ units will be allowed to avail their tax benefits for the unexpired period post DTC. This would result in lot of rush by corporates to establish operating units in SEZ."