The Hindu Business Line : Kamal Nath to take up DEPB issue with PM

THE Union Commerce and Industry Minister, Mr Kamal Nath, on Thursday said the problems being faced by the industry on account of the misinterpretation of provisions concerning taxation of Duty Entitlement Pass Book (DEPB) and negative profits would be taken up with the Prime Minister to ensure the stalemate did not affect the country's exports.

He told a high level delegation of exporters, that one issue was whether negative profit is to be calculated after adding export incentives to the profit directly derived from exports and thus be eligible for tax benefits or to exclude such incentives. The issue of DEPB pertains to the levy of income tax on profit from sale of DEPB. The principal grouse of exporters is the retrospective interpretation of the provision by the tax authorities, which according to them, is tantamount to harassment, impacting harshly on the small and medium exporters who operate on thin margins.

Mr G.K. Gupta, President of the All India Exporters Grievances Forum (AIEG), Mr O. P. Garg, President, Federation of Indian Exporters Organisation (FIEO), and other important export organisations led the high-level delegation, which called on Mr Kamal Nath later, after taking part in a protest demonstration against the policy of the Finance Ministry. A statement by the forum said that for the first time in the annals of Indian export, a protest public meeting was organised by exporters where 250 exporters flew from Mumbai, Ahmedabad, Baroda, Chennai, Tirupur and Kolkata and 1,500 exporters from Ludhiana, Jalandar, Panipat, Jaipur, Jodhpur, Varanasi, Bahdohi and Moradabad travelled by road to converge in the Capital to stage a protest march to voice their concerns over the harassment by the Revenue Department.

The exporters urged the Government to settle the issue on a priority basis and sought a clarification by the Central Board of Direct Taxes that export profit would be calculated after adding export incentives to the profits directly derived from exports, as has been the practice for the last ten years. They have also sought a suitable amendment to Section 28 of the Income Tax Act to incorporate `DEPB' through the Finance Bill 2005 so as to include it with effect from April 1, 1997 for purposes of tax exemption. "Tax authorities from 1997 to 2002 were providing exemption to profit on sale of DEPB until a field functionary pointed out the inadvertent omission of `DEPB' in Section 28 (iii) as reason for considering DEPB not being part of export profits," the memorandum to the Government stated.

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