The Hindu Business Line : Chidambaram hints at abolition of I-T on DEPB benefits

"Your grievance about DEPB (Duty Entitlement Pass Book) will be addressed by a suitable amendment to the law," he told a gathering of exporters at the 47th Annual General Meeting of Capexil (formerly Chemicals and Allied Products Export Promotion Council).

DEPB is one of the export incentives, which gives exporters a tradeable entitlement to import goods duty free up to a prescribed value. The levy of income tax on profit on sale of DEPB has been a major concern because exporters have been facing notices from the tax authorities and old cases have reopened. The Federation of Indian Export Organisation (FIEO) complains that "Exporters are being harassed on technical grounds and the huge demands raised by income tax authorities are forcing them to close their business. The profits earned through exports have already been ploughed back in the manufacturing units to expand and modernise them and none of the exporters have finances to pay for such unjustified demands."

Mr Chidambaram referred to the DEPB-grievance twice in his speech and said a redressal could be expected soon. "It will be a very significant move for the exporters," Mr Rafeeque Ahmed, former President of FIEO, told Business Line on Sunday, but said he would like to see the details. The reference to DEPB came up in the context of a promise that the Government would provide a "stable and friendly tax regime." Mr Chidambaram, however, cautioned exporters that Indian borders could be opened up for goods from other countries. He said that at the WTO, India was asking developed countries for greater market access. If they agreed, India would also lower tariffs on imports, he said.

The Finance Minister said that Budget discussions would commence in a month and called on the people to give in their suggestions in a specified format. The format would require one to state the current position of the law, the change sought and his commitment to the Government, in case his request is acceded to.

Observing in a lighter vein that exporters must now be happy because the rupee is depreciating against the dollar, Mr Chidambaram informed them that the Government expected $9 billion to be added this year to the country's foreign exchange reserves.

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