THE Finance Ministry needs to consider the withdrawal of the Minimum Alternative Tax in Special Economic Zones, that had come as a huge surprise for corporates following the 2011 budget. The imposition of MAT undermines the very purpose of establishing a SEZ unit, making it unattractive and outweighs the tax benefits offered to a SEZ unit, under the SEZ Act, 2005, said Rajkumar Dhoot, President of the Associated Chambers of Commerce and Industry. The MAT, payable by SEZ firms at the rate of 18.5 per cent has been opposed, as it damages India's image as a safe place to invest, said Dhoot, in an ASSOCHAM press release.

While the Finance Ministry had introduced the MAT, withdrawing the tax break, as SEZs were draining revenue, by being exempt from central sales and service taxes, along with certain time-limited income tax exemptions. At present, there are 161 operational SEZs out of a total 588 formally approved and total investment in these zones is more than two lakh crore, as of September 2012.