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Mohan R. Lavi

THE Government has announced the Taxation Laws (Amendment) Ordinance, 2003 with effect from September 8, 2003. The provisions basically relate to reduction in interest charged, introduction of a new Section 10BA and amendments to Section 206C regarding tax collection at source.

Section 10BA has been introduced to provide for deduction for export of all handmade articles or things, which are of artistic value and which requires the use of wood as the main raw material. Since the term artistic value is very generalistic in nature, one can expect various interpretations to this term as the law evolves.

The export turnover would be the consideration in respect of the export received in or brought into India in convertible foreign exchange but does not include freight, telecommunication or insurance charges attributable to delivery of these goods outside India. Clearance in a Customs station is a sine qua non and, hence, sales in a shop or emporium in India would not attract the provisions of this Section.

Undertakings utilising the benefits offered by Sections 10A and 10B would not qualify for the benefit. Initial impressions would have us believe that the number of companies availing themselves of benefits under Sections 10A and 10B and undertaking a business of artistic things made of wood would be very few.

Thinking far ahead, the provisions provide for this benefit only till the assessment year 2010-2011. Akin to Section 80HHC and other like-minded Sections, the sale proceeds are brought into India within a period of six months or such further time as the RBI may grant. The formula to calculate the profits exempt from tax is the proportionate formula as expounded by Section 80HHC and the certification from a chartered accountant is also required. If a deduction is allowed under this Section, no other deduction for exports is permitted.

For the period June 1, 2003 to September 7, 2003, persons liable to collect tax at source under Section 206C for alcoholic liquor, tendu leaves, forest produce, and so on, are duty-bound to collect tax at source at the rates specified in the Table as it existed immediately before June 1, 2003.

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