Sunday, December 17, 2006

New audit system for SEZs likely to check fraud


ARUN S
Posted online: Thursday, December 14, 2006 at 0126 hours IST

NEW DELHI, DEC 13: The government may introduce an audit system to check
tax evasion in special economic zones (SEZ). The revenue department is
pitching hard for such a system and has initiated consultations with the
commerce ministry to finalise the details, official sources told FE.
According to the sources, the Central Board for Excise & Customs is keen
on a concrete auditing system for SEZs, similar to the one it follows at
ports and airports to check violation of custom rules.

The finance ministry has projects revenue losses of Rs 1 lakh crore from
SEZs due to various direct and indirect tax exemptions.

At present, the SEZ Rules require units in the zones to submit an annual
performance report and developers are required to turn in a quarterly
report to the approval committee under the commerce ministry.

The units, in their report, have to show the quantity and price of raw
materials and machinery imported, as well as the net foreign exchange
earned.

It is believed that the introduction of an audit system would benefit
the government as well as end-users, since it would bring about
transparency in the functioning of the units and the developers. It will
also prevent misuse of the SEZ Act, Rules and the incentives provided.

The new audit system will be in addition to the one prescribed in the
checklist for proposals to be taken up by the Board of Approval for
SEZs, wherein a developer has to submit its audited accounts for three
years prior to the application.

Watchful Eye

• Revenue dept wants audit system and has started talks with commerce
ministry

• CBEC is keen on an auditing system , similar to the one it follows at
ports and airports to check violation of custom rules

• SEZ rules require units to submit annual performance report and
developers are required to submit quarterly report to the commerce ministry
http://www.financialexpress.com/fe_full_story.php?content_id=148851

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