Mumbai:
The government will soon amend rules to allow units in special economic zones
to use old machinery and still qualify for tax concessions. The
government had earlier prohibited use of second hand machinery in SEZs to prevent
migration of units from domestic tariff area to the tax-free zones. Reports
quoting senior commerce ministry officials said amendments have been made in the
Income Tax Act and now units will be allowed to use old machinery up to 20 per
cent of their capital goods requirement. The
changes in the Act will be notified in the next 3-4 weeks after the revenue department
fine-tunes the guidelines for transfer of old machinery to SEZs. The
rules have been amended on request mainly from technology companies who wanted
to shift some used machinery from their operations outside India. The
companies include Cisco and Honeywell, and the old machinery that they want to
bring in constitutes a small percentage of their overall investments in the SEZs,
the official said. The
government expects SEZs to generate investments in excess of Rs2,59,000 crore
by 2009 and create 1.7 million additional jobs, additional secretary in the department
of commerce R Gopalan said. Employment
of foreign nationals in SEZs would also be subject to Indian laws, Gopalan said.
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