At present, tax sops are available only to IT operations that are independently registered as SEZs. If they are divisions of the parent IT firm and not registered as independent corporate entities, they are not eligible for the concessions.
Singh, who also holds charge of the Finance Ministry, has decided to extend tax benefits, under Section 10 AA of the Income Tax Act, to IT firms to the extent they get revenue from operations in SEZs, whether or not they are registered as SEZ entities.
In the face of the slowdown in investment in SEZs, the government can relax certain conditions governing the zones across other sectors as well.
"Some relaxation will be there in terms of meeting net foreign exchange obligations so that the units would be able to sell some of their products in the domestic market," Commerce Secretary G K Pillai said.
Pillai said the proposal to allow the export-oriented refineries to sell in the domestic market without attracting the tax is pending with the revenue department.
Since it is the government that wants EOU refineries to sell products like cooking gas in the domestic market instead of exports, they want waiver from tax that is imposed in case of domestic sale by the EOUs.
"Investments have slowed down in the last three months as the global slowdown is taking its toll on SEZs. We will see the year 2009 as being the period of reduced investment," the Commerce Secretary said.
The investment target of Rs 1,22,900 crore (Rs 1229 billion) in SEZs for this fiscal would not be met, Pillai said.
"We are hoping Rs 100,000 crore (Rs 1000 billion) only," he said. However, Pillai said, despite the global slowdown, "Forty thousand new jobs would be created in the IT SEZs by April, and 20-25,000 would be in manufacturing zones."
Incremental investments in SEZs as on December 31, 2008 add-up to Rs 97,870 crore (Rs 978.70 billion) and the zones provide employment to 2,31,629 people.
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