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Enterprises operating from over 200 Special Economic Zones (SEZs) in the country are likely to be exempted from the minimum alternative tax (MAT) of 18.5 per cent on their book profits. The Union commerce ministry has made a strong case for removing MAT on SEZ units on the ground that this would revive domestic manufacturing and provide the much-needed boost to exports.
In addition, the commerce ministry has also put in place an effective monitoring mechanism that is closely looking at what remedial measures can be taken to promote exports in some of India´s key markets. The free trade agreements are going to be examined from that perspective, as and when they come up for review.
Expectations of the government removing MAT on SEZ units are high, even though the finance ministry is still debating the decision´s implications of revenue loss for a government that is struggling to adhere to its fiscal deficit of 3.5 per cent of GDP for 2016-17.