Even as the proposed Direct Tax Code (DTC) is yet to come into effect, India Inc. has raised fresh reservations over the revised DTC draft which is sans special benefits the corporates enjoy under the Special Economic Zones (SEZ) Act.

According to the DTC revised draft, developers and units coming up in SEZs will not get income tax holiday and be subject to minimum alternate tax, provisions that have prompted the industry body, ASSOCHAM to urge the finance minister, Pranab Mukherjee that all such benefits should not be done away with.

In its latest communiqué to Mukherjee, ASSOCHAM's Secretary General D.S. Rawat has insisted that since developers have invested huge money in SEZs, in the lack of tax benefits, there will be adverse impact on export. He said, “About Rs 30,000 crore worth of exposure that banks and financial institutions have given to SEZ projects under various stages of implementation may turn into non-performing assets."

According to him, the government's intention was to make SEZs engine for economic growth supported by quality infrastructure and complimented by an attractive fiscal  package - both at the Centre and state level - with minimum possible regulations and to be treated as deemed foreign territory for all purposes.

Rawat raised that after the announcement of draft DTC, all stakeholders - be it units, developers or financial investors - have lost interest and are confused over government’s policy on SEZs.

ASSCOHAM has urged the FM to come out clear on the ambiguity and ensure financial incentives and tax exemptions continue for SEZs to restore investor confidence.