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DEVELOPERS of special economic zones (SEZs) will get a blanket exemption from stamp duty on land purchases within the notified area for non-core activities such as building hotels, housing complexes, shopping malls and golf courses, according to a government official.

The exemption had become a contentious issue with states where these projects are located demanding that it be restricted to core manufacturing areas, which have to cover at least 50% of the total SEZ land.

The government has extended this to cover the whole area within the zone and has issued guidelines detailing the circumstances under which the sop can be availed, said the official asking not to be named.

For the developers of the 500-odd SEZs in the country, slated to bring in investments of over Rs 100,000 crore, this ends the uncertainty that had cropped up after some states had voiced their opposition.

Orissa had objected to the Centre giving such a tax sop without consulting states and had termed the move ultra vires. It had pointed out that while the Centre had powers to legislate on stamp duty, the power to fix the duty rates lay with the states.

This had forced the commerce department to seek the law ministry’s opinion on the provision in the SEZ Act.

The exemption, however, will be available only after formal approval of the zone. For land bought after in-principle approval, the state government may either give the exemption upfront or collect the duty and refund it after the zone has been set up. If under some circumstances, notification of a zone is cancelled, the state government will be entitled to withdraw the concession and recover the same from the developer.

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