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Monday, Mar 03, 2003

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More I-T sops on anvil for global exporters

K.R. Srivats

NEW DELHI, March 2

EXPORTERS who were agonised over the absence of relief on the phase out of tax exemption of export profits under certain provisions of the Income Tax Law have some cause for cheer.

The Finance Bill, 2003 has a new provision that would in effect extend the scope of double taxation avoidance agreements to include agreements for developing mutual trade and investment.

What this implies is that Central Government would, from April 1, 2004, be empowered to enter into agreements with other countries for granting relief in Income Tax chargeable under the Income Tax law or law in that country in order to to promote mutual trade and investment.

The Income Tax law of India already empowers the Central Government to enter into an agreement with any other country for granting relief with respect to income on which both income tax under the Indian Income tax law and the tax law of the other country has been paid.

These agreements are popularly known as double-taxation avoidance agreements.

``We are only extending the scope of double taxation avoidance agreements," the Chairman of the Central Board of Direct Taxes, Mr P.K. Sarma, said.

"This will help in granting or availing of tax relief for promotion of trade and investment with other countries," he added.

Mr Sarma was talking to Business Line on the sidelines of the post-budget conference organised by the Standing Conference of Public Enterprises (SCOPE) here.

The exporting community, the Federation of Indian Export Organisations (FIEO) in particular, were a worried lot on Friday, after the budget had very little on reliefs to the Section 80 HHC phase out.

They were hoping that the Government would, for the sake of export promotion, put the brakes on the current phase out schedule that has been mapped for Section 80HHC and Section 80HHE.

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