To give a boost to the information technology industry, an empowered group of ministers today decided to waive minimum area requirements for setting up IT special economic zones.
The IT industry will only have to fulfill the twin criteria of a minimum built-up area and employment generation.
An IT SEZ in any tier-I city will need a minimum built-up area of 1 million sq metres that will generate employment for at least 10,000 people. For tier-II and tier-III cities, the criteria will be 5 lakh (Rs 500,000) sq metres and 5,000 people, and 2.5 lakh (Rs 250,000) sq metres and 2,500 people, respectively.
The EGoM met on Wednesday to resolve differences between the commerce and finance Ministries on the minimum area requirement issue. The finance ministry had wanted the existing threshold of 10 hectares for an IT SEZ to be hiked to 25 hectares to check any possible loss in revenue.
The government would shortly issue a clarification on the rules, Commerce and Industry Minister Kamal Nath told reporters after the EGoM meeting. All issues had been, by and large, satisfactorily resolved, he added.
In another development, it had been decided that existing IT units in the domestic tariff area would not qualify for income tax benefits if they chose to relocate to any of the SEZs coming up in the country, government officials said.
The EGoM also set criteria for housing and other infrastructure within these SEZs. For houses located within the SEZ, at least 75 per cent of the occupants will have to be employees at the SEZ. The rest of the houses can be leased to people employed outside the SEZ.
At least 50 per cent of the infrastructure in an SEZ, such as hospitals and schools, will need to be utilised by people within the SEZ.
SEZs for other industries were not granted the same concessions as IT SEZs. The EGoM has decided to increase the minimum processing area required for multi-product SEZs from 25 per cent to 50 per cent of the land area. The current rules make it necessary for a sector-specific SEZ to earmark 50 per cent of land as processing area.
The EGoM is expected to focus on other sectors in subsequent meetings. The revised norms for non-conventional energy and biotech economic zones were expected to be discussed next week by the EGoM, after the ministry of science and technology submitted a revised proposal, officials said.
The EGoM also decided to issue a clarification to specify that exemption from the minimum alternative tax would be allowed only on export profits and not on domestic profits. The finance ministry is likely to issue a clarification under Section 10A of the Income Tax Act.