The commerce ministry has sought stakeholders’ views on the policy and operational issues of the Special Economic Zones (SEZs) in order to solve the taxation and procedural problems faced by the tax-free enclaves.

 “In order to comprehensively address all issues relating to the policy framework and operational issues related to SEZs, suggestions are invited from all concerned,” a news agency report quoted the commerce ministry.

The report added that the commerce ministry is also in the process of preparing a discussion paper which includes all issues and the alternatives for resolving the concerns of SEZs.

SEZs contribute over Rs. 3 lakh crore, or about 28 percent, to the country’s total outbound shipments. With an investment of Rs. 2,00,000 crore, they provide direct employment to over 7,00,000 persons.

Recently, there has been uncertainty over tax exemptions to new SEZs that has led to decline in interest in the tax-free enclaves. Investors are apprehensive about the new draft Direct Taxes Code (DTC).

According to the revised DTC draft, which will replace the Income Tax Act of 1961, tax exemptions for SEZs will be confined to the existing units.

The industry has also expressed concern over land acquisition problems and the imposition of Minimum Alternate Tax (MAT) of 18.5 percent on the book profits of SEZ developers and units.

Under the SEZ Act, units get 100 percent tax exemption on profits earned for the first five years, a 50 percent exemption for the next five years and another 50 percent exemption on re-invested profits in the following five years.