Financial Daily from THE HINDU group of publications
Sunday, Apr 10, 2005
Financial Daily from THE HINDU group of publications Sunday, Apr 10, 2005 |
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Industry & Economy
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Foreign Trade Trade policy: EOUs hope for I-T relief K. R. Srivats
New Delhi , April 9 THE Annual Supplement 2005 to the Foreign Trade Policy has come as a ray of hope for export-oriented units (EOUs) on the income-tax front. It has held that EOUs would be permitted to claim income-tax exemption for income on export proceeds realised within 12 months from the date of export. The Export Promotion Council for EOUs and Special Economic Zone Units (EPCES) is now hopeful that the Income- Tax Department would toe the line of the Foreign Trade Policy on this issue. EOUs account for 10 per cent of the country's exports. "A specific mention in the Annual Supplement has given us hope that Section 10B in the Income-Tax Act would be suitably amended or a clarificatory circular would be issued by Central Board of Direct Taxes (CBDT) for the comfort of the field formations," Mr L. B. Singhal, Director General of EPCES, told Business Line here. The contentious issue, according to EOUs, is the absence of alignment between the income-tax provisions and the Foreign Trade Policy. EPCES had raised this matter in its discussions with the Revenue Department in the run-up to the announcement of the Annual Supplement. While the Foreign Trade Policy allows export proceeds to be realised within 12 months from the date of export, Section 10B of the Income-Tax Act stipulates that the tax exemption would be available only if certain conditions are met. An important condition is that the sale proceeds should have been "received in or brought into India by the assessee in convertible foreign exchange, within a period of six months from the end of the previous year or, within such further period as the competent authority may allow in this behalf." Mr Singhal highlighted that it is on this issue that more clarity isneeded at the level of the assessing officers. Meanwhile, EPCES is disappointed that the Annual Supplement has not addressed its request for Central Sales Tax exemption on supplies from domestic tariff area units to EOUs.
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