Industry & Economy
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Taxation
`EOUs should be exempted from central sales tax'
Our Bureau
New Delhi
,
Jan. 21
THE Confederation of Export Units (CEU) has made a case for doing away with the system of first collecting the central sales tax (CST) from 100 per cent export-oriented units (EOUs) and then refunding it back to such units.
In a pre-budget memorandum, the CEU has said that this system leads to blockage of funds, delay in reimbursement, unnecessary administrative work and increase in transaction cost besides breeding corruption.
"As special economic zones (SEZ) have already been exempted from CST, the 100 per cent EOU should also be extended the same facility," the CEU has said.
The CEU has also sought continuation of tax holiday under Section 10B of the Income-Tax Act.
The CEU's pre-budget memorandum has said that the elimination of tax holiday under Section 10B of the Income-Tax Act has stopped the flow of fresh investment in the sector and to attract fresh investments the provision of Section 10B should continue without any time-limit.
In a press release, the CEU President, Mr S.K. Saraf, said that the sunset clause (in Section 10B) should be deleted and EOUs be extended the same income-tax benefits as are available to SEZs.
"The entire profits of 100 per cent EOU should also be exempt from income-tax for the period in which the unit has the status of an EOU," the release said.
CEU has also sought abolition of all State cesses, taxes, duties and levies, as they cannot be exported and only increase the transaction cost.
There are currently 1,700 EOUs and they accounted for exports worth Rs 27,890 crore in fiscal 2003-04 as against Rs 23,000 crore in 2002-03, the CEU release said.
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