New Delhi, June 2 The exporting community has sought restoration of income-tax exemption on profits.
This tax holiday should be available for five years, they told the Finance Minister, Mr Pranab Mukherjee, here on Monday as part of the pre-Budget discussions.
A tax holiday, they contended, was necessary because of the “thin margins” in export activities. An income-tax exemption would help them competitively price their products in the international markets, they said. The global economic slowdown has dented demand in the developed markets.
“Exporters are working on thin margins and taxation of the profit leaves exporters with no money for modernisation and expansion of manufacturing,” Mr A. Sakthivel, President, Federation of Indian Export Organisations(FIEO), told Business Line after meeting the Finance Minister.
Competition
The exporting community also sought an increase in drawback and duty entitlement passbook (DEPB) rates by 5 per cent. This is to neutralise the fiscal stimulus packages given for exports in China, Vietnam and Bangladesh, according to Mr Sakthivel.
Besides seeking blanket service tax exemption on all services used during the course of exports, the FIEO also suggested that exporters should be exempted from the fringe benefit tax. It also suggested that export credit should be available at 7 per cent across the board without linking it with the prime lending rate. Also, the interest subvention scheme should continue till March 31, 2012.
Besides FIEO, senior officials from the Apparel Export Promotion Council, the Export Promotion Council for
EOUs and SEZs (EPCES), EEPC India, CHEMEXCIL and SRTEPC participated in the meeting. The meeting was also attended by the Commerce Secretary, Mr G.K. Pillai, and senior officials from the Finance Ministry.
ECBs for SEZs
The EPCES suggested that SEZ units should be allowed to raise external commercial borrowing (ECB) of up to $500 million in a year without maturity restrictions.
In 2002, the Reserve Bank of India had allowed ECB facility for SEZ units, but this did not find mention in the central bank’s latest master circular on external commercial borrowings, Mr L. B. Singhal, Director-General of EPCES, told Business Line.
The EPCES is also understood to have reiterated its demand for granting of “infrastructure status” for SEZs. The RBI has so far not recognised SEZs as “infrastructure” even as the Empowered Group of Ministers has decided that SEZs should be accorded “infrastructure” status.
It was also suggested that the central sales tax should not be imposed and collected on goods sold from SEZs in the domestic tariff area (DTA).
For export-oriented units, the EPCES suggested that Section 10B benefit should be extended by five more years. It also demanded that the minimum alternate tax on export-oriented units be withdrawn. The EPCES also called for withdrawal of the fringe benefit tax on export-oriented units and SEZs.
Source : Business Line