IT industry body Nasscom today asked the Centre to continue giving tax benefits to new SEZ units for a few more years, which the Finance Ministry has proposed to revoke under the Direct Tax Code regime.

"Under the DTC, you (government) should define a period for making the SEZs operational and the units (that would come up therein) should be given the same benefits as promised (in SEZ Act)," Nasscom President Som Mittal told reporters here.

According to the revised DTC draft, which will replace the Income Tax Act of 1961 after approval by Parliament, tax exemption will be provided only for existing SEZ units and not new units.

Of the 580 approved special economic zones (SEZs), only 111 are operational. A SEZ is considered operational if at least one unit in it has started exports.

"There are SEZs which have been notified, but yet to be operational," Mittal said.

He said the government should fix a date, after which it may or may not provide the tax exemptions.

"For those units coming up after the set date, the government can provide whatever benefit it wants to give," he added.

SEZs have attracted an investment of about Rs 1.5 lakh crore, mainly due to the 10-year income tax exemptions given to the units.

The Finance Ministry's had proposed to deny income tax benefits to new units in SEZs in a revised draft of the Direct Tax Code (DTC). The DTC is likely to come into effect from April 1, 2011.

"SEZ is a great way to encourage investment, not only in larger cities, but smaller tier-II and III towns," Mittal said, adding that the existing SEZ policy should be continued.

The Exports Promotion Council of EoUs and SEZs (EPCES) and a host of SEZ developers, including DLF and Unitech, had met Finance Minister Pranab Mukherjee yesterday and demanded continuation of the tax benefits for new units.