Indian Government Split Over Tax Administration In SEZs

by Lorys Charalambous, Tax-News.com, Cyprus

17 October 2003

According to a report in the Business Standard, the Indian government remains split over who will administer the tax breaks for firms in the Special Economic Zones, with both the Commerce and Finance Departments claiming responsibility for the role.

Whilst the legislation governing the SEZs appears to indicate that the Commerce department has fiscal responsibility within the zones, the Revenue department is arguing that all tax-related issues come within its remit.

Consequently, the issue is now being taken up at ministerial level, although it has been reported that Revenue Secretary Vineeta Rai and Commerce Secretary Dipak Chatterjee were unable to reach any sort of compromise on the matter following a meeting on Monday.

The departmental disharmony had forced the government to postpone the notification of Customs and Excise rules concerning the new SEZs to October 15, but the ongoing deadlock has meant that this deadline has also been missed.

Meanwhile, government officials have sought to defuse the situation, saying that draft notifications have been sent to the Revenue department and will be put in place shortly, according to the Business Standard report.

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