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Tax
Breather for Indian Exporters
The
Prime Minister of India ("PM"), with a view to give a fillip
to the export market of India has referred certain tax issues
to the Economic Council ("EC") for their consideration.
The
issues referred by the PM to the EC are:
1. The extension
of the sunset clause on the tax holiday available to export
oriented undertakings ("EOUs"). As per the existing provisions,
no tax holiday would be available on any export profits made
after March 31, 2009.
2. The exemption
of EOUs from levy of service tax. Currently, the service tax
exemption is available in case of export of services, provided
they fulfill certain specified conditions. This suggestion may
be in an attempt to exempt EOUs from service tax completely.
3. The extension
of "deemed export" benefit to domestic tariff area units for
supply against the "served from India" scheme certificate.
The other
issues of growing unrest among Indian exporters were the levy
of tax on profits derived from the Duty Entitlement Pass Book
Scheme (an import scheme available for exporters) and denial of
deduction in respect of profits from exports (section 80HHC of
the Income Tax Act, 1961). In this regard, the PM has issued a
directive to the Indian revenue department to keep the ongoing
tax proceedings and recovery of tax on these profits in abeyance.
If considered
and implemented, these proposals would bring a boost to Indian
exports.
Source:
Times of India dated April 9, 2005, "Tax Breather for exporters."
page 15,
You
can direct your queries or comments to Bijal
Ajinkya and Shivani
Shah
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