Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: list of goods taxed at 4% :: ACCOUNTING STANDARDS :: TDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: VAT RATES :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: Central Excise rule to resale the machines to a new company :: form 3cd :: due date for vat payment :: empanelment :: cpt
 
 
« News Headlines »
 Securities excluded from GST ambit in revised Bill
 GST dilemma: Hope fades for new tax regime
 5nance.com launches tax investment platform
 Is government tapping your phone?
 Income tax department to use analytics to look for discrepancies in bank accounts
 GST Council fails to break deadlock over indirect tax regime, next meet on Dec 11 and 12 to hammer out differences
 Invoking Writ Jurisdiction For Income Tax Matters
 How to file income-tax returns online
 How Income Tax Returns Are Scrutinised
 All About New Income Disclosure Scheme to make Demonetisation successful
 Your deposit may draw income tax notice

Continue I-T sops for export-oriented units
February, 18th 2008
Kamal Nath for removal of sunset clause

G. Srinivasan

In the run-up to the Union Budget 2008-09, the Commerce and Industry Minister, Mr Kamal Nath, has sought continuation of the income tax benefits bestowed on 100 per cent export-oriented units (EOUs), which are set to be removed after March 31, 2009.

Sources in the Government said here that in an identical communication to the Prime Ministers Office and the Finance Ministry, Mr Nath pointed out that the accent of the UPA Government was always on encouraging manufacturing activities and augmenting employment, and on which the 100 per cent EOU scheme precisely scores well ever since it was introduced in the early 1980s.

Encouraging Manufacturing

He said that the EOU scheme was meant only for carrying out manufacturing activities within the custom-bonded area, and no trading activity was allowed under the scheme. The Minister said the scheme facilitated creation of dedicated manufacturing capability for exports, which amounted to Rs 68.782 crore with exports during the last five years from EOUs clocking more than 31 per cent growth.

The net foreign exchange earning by the EOUs is over 60 per cent. In the current fiscal, exports from EOUs would cross the one-lakh crore mark.

When contacted, the Council for 100 per cent EOUs and SEZs, the Director General, Mr L.B. Singhal, said that among the plethora of issues currently plaguing the units under the scheme, the most important one affecting them is the sunset clause under Section 10B of the Income Tax Act, under which no income tax exemption would be available for the exports effected by the 100 per cent EOUs after March-end, 2009.

Urgent need

Hence there is an urgent need for removal of the sunset clause in the forthcoming Union Budget, as otherwise no fresh investment would flow under the scheme.

If no income tax exemption is provided from March 2009 onwards, there is no reason why any industrialist will set up a unit under this scheme and accept vigorous custom bonding regulations, procedure of obtaining procurement certificate for every import consignment or CT3 procedure for every domestic procurement and other procedural hassles like repeated registration with customs.

No industrialist would like to pay unnecessary cost recovery charges for the Central Excise Inspectors posted for these units even for discharge of their sovereign functions, Mr Singhal said.

Tax exemption

Even as there is an unstated principle that exporters should be exempted from indirect taxes, EOUs have to bear the burden of a host of indirect levies from the State Governments and local bodies such as purchase tax, entry tax, electricity duty, property tax, works tax, mining royalty, water cess, education cess, mandi tax, commercial tax and local area development tax.

Underlining the importance of income tax benefits to the EOUs, the Council said the EOUs could also be asked to re-invest the portion of profits to make them comparable with SEZ units, so that their basic remit of enhancing manufacturing activity and employment would continue.

As the Finance Ministry and the Ministry of Information Technology are reportedly toying with the extension of income tax benefits to Software Technology Park of India (STPI) Scheme, the Council said that EOU/STPI/Electronic Hardware Technology Park Schemes are all part of the same chapter of the Foreign Trade Policy and are governed by the same customs/central excise notification. Hence the sunset clause needs to be removed for 100 per cent EOU scheme as well, along with the STPI Scheme, the Council argued.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Team

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions