No Extension Clause For SEZ Units

Budget remained silent on bringing in a conducive policy for special economic zones and termed it a 'missed opportunity' for the country. The SEZ benefits shall end in March 2020, but there is no clarity on the new SEZ policy or an indication of what is to come," Nasscom said in a statement. Hence, a lack of incentives will impact India's image. 

Currently, 232 SEZs are operational (out of 372 Notified SEZs). Over 5,000 units are operating from these operational SEZs  and contributes 7.9 per cent to the GDP and is one of its largest contributors, SEZs are providing direct jobs to over 2 million people and it is estimated that over 4 million indirect jobs are created by the SEZs (by the vendors, service providers, contractors, sub-contractors of these SEZs). The turnover from these operational SEZs reached 7,01,179 crores in the financial year ended March 31, 20 2019. The operational SEZs contribute to over one-fifth of the exports from India.

Looking at the performance of the SEZs and considering the fear of a good number of SEZs that have been notified but have yet not become operational, it was expected that the Government would favourably consider removing or extending the sunset clause for SEZ units, which was introduced by the Finance Bill, 2016 to come into effect on March 31, 2020. After coming into force of the sunset clause, the income-tax incentives being provided to the newly set-up SEZ units in terms of Section 10AA of the Income Tax Act, 1961 would no longer be available. In other words, income tax benefits under Section 10AA would be available to those SEZ units which commence their operations on or before March 31, 2020.

On July 5, 2019, Finance Minister Nirmala Sitharaman presented the Budget 2019-20 of Namo 2.0. In spite of being major contributor to the Indian Economy, the SEZs remain neglected in the budget.There is a growing concern have been raised by the Ministry of Finance that the Government is foregoing huge revenue by providing tax exemptions/ concessions to the SEZ
Given the fact that the SEZ Policy could evoke interest of the investors mainly because of the incentives offered by the SEZ Policy, the concerns of the Ministry of Finance appears to be unfounded.