In a significant relief to exporters, the Supreme court has ruled that excise duty and sales tax cannot form part of total turnover while computing deduction under section 80HHC of the Income-tax Act, 1961.

The ruling will help exporters claim deduction in respect of larger share of their business profit as profit earned from export and would thus reduce their tax liability, wherever the above issue is pending in ligitation.

A division bench of Supreme Court comprising Justices SH Kapadia and B Sudershan Reddy, passed this judgment recently. Federation of Indian Exporters Organisation president Ganesh Kumar Gupta said, This kind of judgment will help promote export from India.

Under section 80HHC of the Income Tax Act 1961, exporters are allowed deduction in respect of profits derived from exports, which is computed as the business profit multiplied by the ratio of export turnover to total turnover.