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Government allowed Outsiders; set to get access to schools, hospitals, flats in SEZs

NEW DELHI: After months of discussion, the government is set to allow developers of special economic zones (SEZs) to throw open apartments, schools and hospitals to those who live outside the enclaves, a move that may attract criticism. The commerce department is going to insist that the concession will only be available to developers, who are willing to refund the taxes that they saved on buying raw materials and services that went into construction of the non-processing facilities, sources familiar with the development told TOI.

With developers complaining of facilities remaining unutilized due to low occupancy levels in SEZs, the commerce department had for long been pitching for allowing outsiders to access these facilities. While the revenue department had blocked the move, the sources said a decision is expected to be notified over the next few days.
The move was part of a package to boost investment in SEZs, which have collapsed due to withdrawal of tax sops and tougher land acquisition norms. The revenue department is, however, unrelenting in its position on exemption from minimum alternate tax and dividend distribution tax, two concessions that were withdrawn despite the SEZ Act promising the sops.

While developers and the commerce department are still insisting on the tax sops, a fresh proposal may be sent to the finance ministry in the run up to the Budget, said sources, adding that a few options are being discussed. The developers will have to contend with the concessions in the non-processing area, although it is unclear how the rules play out, especially related to the amount of refund. But, with the fresh measures, developers can look forward to better revenues from hospitals, schools and flats that have been lying idle as the demand for setting up units is much lower than what was anticipated.