The council, headed by noted economist and former RBI governor C Rangarajan has, however, shot down the proposal of the finance ministry to slap an export obligation of 51 per cent on the units in SEZs.

"The EAC has recommended to the prime minister that there is no need to put a cap on these zones, rather finance ministry should bring units in these zones under MAT which could be adjusted for tax on sales in the domestic market," official sources said.

MAT is an advance tax imposed on company profits that is adjusted against future tax liabilities of corporates that do not pay tax at present due to certain exemptions.

In 2007 Budget, Finance Minister P Chidambaram had brought IT units in Software Technology Parks (STPI) under MAT, for which tax holiday has been extended to March 2010.

The council, which provides suggestions to Prime Minister Manmohan Singh on crucial economic issues like tackling inflation, has also opposed any ceiling on the number of SEZs in the country. It has contended that "area and the number of units in the SEZs is not too high in comparison to the production in the Chinese SEZs".

The sources said earlier that the finance ministry had proposed to impose an export obligation on SEZ units, which was strongly opposed by the commerce ministry. It wanted that these units export at least 51 per cent of their production to avail tax benefits.

According to the SEZ rules, units in such zones have to be only net foreign exchange earners. This means that each unit's exports should be more than its imports.

The government has so far sanctioned about 450 SEZs, of which less than 100 are operational. Commerce Minister Kamal Nath has said the government could review the SEZ Act, 2005, in near future.

The sources said the EAC recommendations could be looked into by the Empowered Group of Ministers headed by External Affairs Minister Pranab Mukherjee to take a final decision on the issue.