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ENS ECONOMIC BUREAU
NEW DELHI, Feb 7: The corporate tax holiday period for hundred per cent export-oriented units and units set up in the export processing zones will be raised from 5 to 10 years by amending Sections 10-A and 10-B of the Income-Tax Act, 1961 when the 1999-2000 budget is presented to Parliament on February 27.
The budget is also likely to fix a reasonable level of duty on sale in the domestic tariff area (DTA) by EOUs of final products with negligible import content.
Under the current dispensation, the duty is charged on the total value of the final products sold in the DTA by the EOUs.
Also under consideration in the budget is a demand from EOUs to grant them central tax exemption instead of refunding such tax, which is time consuming.
Besides, the benefit of duty drawback is likely to be conceded to supplies made by DTA units to EOUs. This matter is being examined by the commerce ministry in consultation with the finance ministry. In addition, obsolete computer/software machines may be allowed to bedestroyed within the premises of EOUs instead of in the DTA. Under active consideration of the government is a proposal from the EOUs to avail of the benefit of zero duty for import of new as well as second-hand capital goods under the export promotion capital goods scheme in the 1997-2002 EXIM policy.
At a recent meeting representatives of EOUs had with a senior official in the commerce ministry ,they urged the government to consider allowing them the tax holiday for the entire duration of their operations instead of fixing a definite period for the purpose.
Under the EOU scheme, EOUs have to remain customs-bonded for a period of five years. The period will be 10 years cases where heavy capital investment is involved.
Representatives also demanded that EOUs be allowed to de-bond at the end of the five year period at nil rates of duty. The commerce ministry in consultation with the finance ministry was examining a suggestion of EOUs for permitting exports through couriers, it was indicated.It wasalso indicated that the commerce ministry was considering a proposal from EOUs to judge their performance on net foreign exchange (NFE) earned. As per the current exim policy, their performance will be evaluated on the basis of NFE as a percentage of exports.
The meeting was also told that a suggestion for permitting DTA sale by EOUs on self-certification basis was under examination. EOUs also wanted the government to consider their plea for sale of samples for market promotion should be on self-certification basis.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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