`On the income-tax front, there has to be equitable treatment for all exporters'

Our Bureau

New Delhi, Dec. 26

EXPORTERS in the domestic tariff area (DTA) are demanding parity on the taxation front with those in the special economic zones (SEZs). They are making a case for the restoration of 100 per cent tax exemption on export profits.

"On the income-tax front, there has to be equitable treatment for all exporters whether they are located in DTAs, SEZs, Jodhpur or Saharanpur (where wooden handicrafts get IT exemption)," Dr R.K. Dhawan, Chairman (Northern Region), Federation of Indian Export Organisation (FIEO), told reporters here on Monday.

He said India's absence in many of the regional groupings is affecting the country's export efforts. "It is very difficult to enter new markets (because of the regional groupings). To add to this, the taxation cost is impacting the competitiveness of exporters in the DTA. This is prompting the flight of units to other markets, especially in the garments sector," Dr Dhawan said.

Currently, units located in SEZs and certain categories of export-oriented units alone enjoy income-tax exemption. Even this exemption is for a specified time period only, as sunset-clauses have been inserted for various sections in the income-tax law that grants these benefits.

"We were told that Section 80HHC benefits have to be removed as they are WTO-incompatible and in a way a form of subsidy. But the developed countries continue to subsidise their agriculture. When they can do that, why can't our Government allow us tax exemption on export profits? We are not saying that restoration of Section 80HHC is the only way. It could even be through other sections of the income-tax law," he said.

(This article was published in the Business Line print edition dated December 27, 2005)
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