The Hindu : National : ADB: tax sops for SEZs unnecessary

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Wednesday, Mar 28, 2007
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National

National

ADB: tax sops for SEZs unnecessary

Special Correspondent

NEW DELHI: The Asian Development Bank (ADB) on Tuesday joined ranks with the critics of Special Economic Zones (SEZs), saying that the tax incentives being offered by the Government to such developers and the units in these zones were "unnecessary".

Noting that such tax breaks were "unnecessary," the bank's report, "Asian Development Outlook 2007," said: "SEZ tax inducements are expensive, and come at a time when the Government is struggling to provide adequate infrastructure in the wider economy".

According to estimates by the National Institute of Public Finance and Policy (NIPFP), the Government is expected to lose about Rs. 1,00,000 crore in revenue on account of fiscal concessions to SEZs.

The ADB report pointed out that the special tax incentives would open loopholes for tax evasion and undermine investments in firms located outside such zones, as these units would suffer from "worse infrastructure and higher taxes."

Instead, better infrastructure and more bureaucratic efficiency in SEZs would be sufficient to stimulate investment, the report said.

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