The Hindu Business Line : After disallowance under Sec 80HHC — Exporters hit by `astronomical' tax notices from I-T Dept

SMARTING under problems caused by the depreciating dollar, fierce international competition and shrinking margins, Indian exporters are now hit by a spate of tax notices from the Income-Tax Department.

"Astronomical tax demands have been served to almost the entire exporting community by the IT Department after disallowing the deduction under Section 80 HHC of the Income-Tax Act, 1961. As a result of this disallowance, the tax impact in the Western region alone is estimated at Rs 20,000 crore," Mr Ganesh Kumar Gupta, Chairman of the Federation of Indian Export Organisations (FIEO), says.

He said that in most of these cases, DEPB benefits were not even considered as business income as defined under Section 28 of the IT Act. "The FIEO has been pursing this issue for over a year now and we have made a representation to the Ministry in August last year, as a result of which the Central Board of Direct Taxes (CBDT) issued a circular in August 18, 2003. The circular informed that all matters related to assessment, recovery and appeals in regard to Section 80HHC will be stalled till November 30, during which time a three-member team of Joint Secretaries of CBDT will give its findings. Till date, there is no outcome of the committee's deliberations," according to Mr Gupta.

In the light of this, FIEO, which is also the apex export promotion body of the Government, has made an appeal to the Finance Minister to amend the Act "to save the exporters from these IT-related problems and also extend the deduction under Section 80HCC for all exporters till 2009, as has been allowed in the case of 100 per cent export oriented units and the new SEZ units."

The problems of the exporters in the Western region will be highlighted through a series of seminars on Section 80HCC, which would be held in Mumbai on June 15, in Ahmedabad on June 25 and in Pune on July 1.

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