The Hindu Business Line : Exporters against eligibility ceiling for 80 HHC benefit

MORE than a hundred exporters attended a protest meeting organised by the Federation of Indian Export Organisations (FIEO) to express their disappointment at reports that the Government may consider fixing a ceiling on export turnover to be eligible for the 80 HHC benefit.

The Rangarajan Committee is expected to give a guideline regarding the interpretation of Section 80 HHC and remove gaps in the Income Tax Act regarding the export benefit as given under Section 28.

According to Mr Ganesh Kumar Gupta, Vice-President, FIEO, there were two issues at hand — not allowing the deduction under Section 80 HHC where exporters have negative or no profits and the service tax on commissions paid to foreign agents and on freight charges.

He said that Section 80 HHC clearly laid down the formula for computation of the deduction as being equal to the profit from business plus export incentives. In situations where the profits were not positive, the department had chosen to ignore the second part of the formula. This needed to be addressed by the Rangarajan Committee, he said.

According to Mr Amit Goyal, President, Confederation of Indian Apparel Exporters, a number of contradictory judgments at Income Tax Appellate Tribunals across the country, and specifically in Mumbai, in the last year had complicated the issue.

Exporters could stand to lose thousands of crores of rupees if the DEPB issue was not resolved, he said.

Mr S.K. Saraf, Chairman, FIEO (Western Region), said that the service tax on commissions paid to foreign agents and freight charges would effectively force an export tax despite the Government's efforts to the contrary.

The exporters have decided to go to New Delhi to draw the Government's attention to the problem and are also planning a strike, the details of which will be announced later.

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