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The Centre has extended permission to Tata Power till the end of April to operationalise its SEZ unit for defence manufacturing in Bengaluru. The company had appealed for an extension saying its plans had got delayed due to restructuring within the company. It said it was likely to start operations by March-end.
The Board of Approval (BoA) for SEZs, which met on March 20, also gave formal approvals to Larsen & Toubro Infotech (LTI) and Tata Consultancy Services (TCS) to set up IT/ITES SEZs in Navi Mumbai and Kancheepuram, respectively, according to the minutes of the meeting.
Sunset clause
SEZ developers and units are preparing for the setting in of the SEZ sunset clause on March 31, as the government has not given any indication on a possible extension despite several submissions by investors.
As per the clause, all SEZ units starting operations on April 1, 2020, or later will not be eligible for direct tax benefits. These include 100 per cent income tax exemption on export income for the first five years, 50 per cent for the next five years thereafter, and 50 per cent of the ploughed-back export profit for the next five years.
“While SEZ units that are about to start operations are trying to speed up their work to meet the month-end deadline so that they are eligible for direct tax benefits, new approvals are also being sought by developers for setting up new zones as the scheme will retain all indirect tax benefits for both units and developers,” a government official told BusinessLine .
Tata Power, in its application seeking an extension of the Letter of Permission for its defence manufacturing unit in KIADB Aerospace SEZ, Bengaluru, which lapsed on March 7, had informed the BoA that it had already made an incremental investment of ₹51.75 crore in the unit, and that building and material procurement was 100 per cent complete.
Now, with an extension of permission till April 30, the company can try to operationalise the unit by March 31 to get the direct tax concessions.
Indirect tax benefits for SEZ units which will continue beyond March 31 include duty-free import/domestic procurement of goods for development, operation and maintenance of SEZ units, provision of zero-rated supplies to SEZs under the IGST Act, 2017, and single-window clearance at State and Central levels.
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