Friday, September 22, 2006

Norms to curb SEZ land misuse

NEW DELHI, SEPT 21: To prevent special economic zones (SEZs) from becoming a pure-play realty business, the government on Thursday limited the number of houses, hospital beds, hotel rooms and office space an SEZ developer can create to avail of tax sops.
The government also laid down new criteria for assessing promoters’ quality: they should each have a net worth of Rs 50 crore or invest Rs 250 crore in a sector-specific SEZ. For multi-product SEZs, each promoter should invest Rs 1,000 crore or have a net worth of Rs 250 crore. The Board of Approvals (BoA), however, reserved the right to waive the conditions on merit.

Addressing mediapersons, special secretary (commerce) GK Pillai said, the new conditions would leave SEZ developers with little room for manoeuvring. “We want to ensure that SEZs are equipped with world-class social infrastructure,” he said.

According to the new norms, sector- specific SEZs will get full tax benefits for constructing specified social infrastructure. The upper ceiling for these benefits are 50,000 sq metre of office space, 7,500 houses, 100 hotel rooms, 25-bed hospitals and educational institutes on a 25,000 -sq metre area .

In multi-product SEZs, full tax benefits will be given for 25,000 houses, 250 hotel rooms, 100-bed hospitals and educational institutes on 2.5 lakh sq metre.

Realty bites
• Promoters must have Rs 50 crore networth or bring in Rs 250 crore for sector-specific SEZs
• To promote multi-product SEZs, networth must be Rs 250 crore or they must invest
Rs 1,000 crore
• Ceiling specified for number of houses, hospital beds, hotel rooms. No tax sop for extra facilities

The developers will, however, be free to build more such facilities without violating the master plan and earmarking 40% land as green-zone. Facilities created by SEZ developers over and above the specified ceilings will not qualify for full tax benefits. There could, however, be exceptions to this rule, subject to the BoA nod.

Pillai said, there would be no bar on outsiders availing of these social infrastructure facilities, although SEZ employees would get priority. The employees can sub-lease their houses or other property, but not sell them.

The authorised operations eligible for approval in IT/ITES, biotech, and gems & jewellery SEZs include Wi Fi/Wi Max services, roads and rain harvesting plants. In multi-product SEZs these include, rail heads, ports, airports, banks and golf courses.

Meanwhile, the BoA on Thursday approved 14 more SEZs, taking the total of SEZs cleared to 164. A 2,085-hectare multi-product SEZ in Nagpur by Maharashtra Airport Development Authority and a 284-hectare textiles and garment SEZ in Anjar, Maharashtra by the Welspun group were among the SEZs approved .


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