Textile firms seek I-T waiver under DEPB plan

The Federation of All India Textiles Manufacturers' Association (FAITMA), the apex organisation of about 200 textiles bodies, has urged the Union government not to collect income tax on sale proceeds under the Duty Entitled Pass Book (DEPB) scheme with retrospective effect.

Arvind Poddar, president, FAITMA, said the Center has not yet issued a directive to stop collection of tax on the DEPB scheme, even after the Prime Minister assured the organisation a week ago.

The delay in issuing a directive is causing concern to the textiles exporters, especially small and medium sized, at a time when they are gearing up to fight their Chinese counterparts in the global market place, he said.

According to him, the exporters have been enjoying the DEPB scheme for years. "Now, the income tax department is issuing notices to the exporters asking them to pay tax on the scheme with retrospective effect. As the exporters are asked to pay tax for the previous years, they are being burdened with penalty, arrears and interest on arrears. As a result, the existence of small and medium exporters are put under question," he said.

Poddar also pointed out that the Centre had sanctioned exemption of export income from income tax under section 80HHC. The incentives were issued to neutralise duty suffered on raw materials by exporters.

"If the income tax department now asks the exporters to pay the levy equivalent to DEPB debate along with arrears and penalty, domestic textiles exports will become uncompetitive," he added.