According to sources, the Government has decided to alter rules to let units in Special Economic Zones use old machinery and still be eligible for tax concessions.
The Government had earlier forbidden the use of second hand machinery in SEZ to prevent migration of units from domestic tariff area to tax free zones.
Sources in the Commerce Ministry said units will be allowed to use old machinery up to 20 percent of their capital goods requirement. This change followed amendments made in the Income Tax Act. The revenue department has taken up the topic for fine-tuning of strategy.
It was primarily technology companies like Cisco and Honeywell that requested the Government to let them shift some of their used machinery to SEZ. However, according to a source, the equipment they want to reuse constitutes a very small percentage of their total investment in SEZs.
marketing@alchempro.com
