Statement (a) claims that SEZ concessions and exemptions do not include those on direct taxes. This is incorrect. The Special Economic Zones (SEZ) policy in India, particularly the SEZ Act, 2005, provided significant direct tax benefits, such as a 100% income tax exemption on export profits for the first 5 years, 50% for the next 5 years, and 50% of ploughed-back export profits for the subsequent 5 years. While these provisions have seen changes over time (e.g., introduction of MAT/AMT, phase-out of income tax holiday for new units), stating that they "do not include" direct tax exemptions is fundamentally wrong regarding the historical and intended benefits of the SEZ scheme. Statement (b) states that SEZ exemptions do not include dilution of any order, direction, or law on labour matters. This is generally correct. The SEZ Act and Rules emphasize compliance with existing labour laws. While state governments have some flexibility in administering labour laws within SEZs (e.g., declaring them as public utility services to regulate strikes), the fundamental provisions of labour laws regarding working conditions, wages, safety, and rights are expected to be followed. SEZs are not intended to be zones where labour laws can be ignored or diluted.
Which of the following two statements is/ are correct ? a. The concessions and exemptions to the SEZ entrepreneurs do not include those on direct taxes but are granted only for export activities and infrastructure development. b. Nor do they include dilution of any order, direction, law on labour matters.
Asked in MPSC CS Prelims 2016 · Topic: Fiscal Policy & Revenue (Taxation System in India: Direct, Indirect taxes, and Tax Reforms (including GST))
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