Sun may set on SEZ rush sans extension

Mumbai: With the budget not extending the Sunset Clause beyond March 31, the recent rush seen among corporate tenants to operate out of Special Economic Zones (SEZ) in order to avail tax benefits is likely to abate.

Experts, however, said that the government may announce a new framework, as SEZs have proved their employment generation and export potential over the last decade or so.

According to Section 10AA of the Income Tax Act, units in SEZs get a phased tax-holiday for a period of 15 years.

The benefit is available to only those units that start operations before March 31 this year.

Around one third of India’s office market supply comes from SEZs, and Information Technology SEZs form a major chunk of exports, valued at more than $43 billion annually. Technology, engineering and manufacturing companies are the most represented in SEZ facilities.