Rs 83k cr Revenue Lost On SEZs In 6 Years – Times of India – 24-Nov-2014
November 25, 2014 - Uncategorized
More than 50% of land allotted to special economic zones (SEZs) across the country remains idle, and its very purpose was defeated with no significant increase in employment even as the government’s revenue foregone was to the tune of Rs 83,000 crore between 2007 and 2013, the comptroller and auditor general (CAG) has found.
Exposing systemic weaknesses in tax administration, a performance audit on SEZs by the CAG revealed that ineligible tax deductions were extended to companies, some of which diverted land allotted to them to other uses. There was overall decline in manufacturing in these zones, said the CAG report, likely to be tabled in the winter session of Parliament.
“Tax concessions to SEZs for the period 2007 to 2013 works out to Rs 83,104 crore on account of direct taxes and customs,” sources said, adding that this revenue foregone did not include loss to the exchequer on account of central excise and service tax that could have accrued if these companies were brought out of the SEZs. The audit also found that more than 50% of the land allotted remained idle even though the approvals dated back to 2006.
The revenue foregone, or loss to the exchequer, could be many times more considering other concessions availed by these companies such as stamp duty, VAT, CST etc could not be quantified in the absence of any monitoring mechanism, sources said.
A similar study on functioning of SEZs was carried out by the parliamentary standing committee on commerce in June 2007 where it had estimated the duties foregone at over Rs 1.75 lakh crore from tax holidays granted to SEZs between 2004 and 2010.
The land allotted for Jawaharlal Nehru Port Trust SEZ.
The purpose of setting up SEZs was to create largescale employment, investment, exports and economic growth. The CAG report, however, said national indices on economic growth, trade infrastructure, investment and employment generation did not show any upward trend due to SEZs.
“Land acquired for public purposes was subsequently diverted (up to 100% in some cases) after de-notification,” the report said. “Seventeen states were not on board in implementing the SEZ Act with matching state level legislations, which rendered the single window system ineffective. Developers and unit holders were almost left unmonitored, in the absence of an internal audit set-up. This posed a huge risk for revenue administration,” the report added.