Govt extends tax benefits to EoUs

In a big-ticket measure, the direct tax benefits to 100 per cent export-oriented units (EoUs) have been extended till March 31, 2010. This benefits, available under Section 10 B of the Income Tax Act, were to expire on March 31, 2009.

Sources say the income tax benefits under the Software Technology Parks of India scheme, which will also expire on March 31, 2009, may also be extended in the coming months.

The V Krisnamurthy Committee on manufacturing had recommended extending the sops to boost manufacturing.

Industry has been maintaining that the scheme has been successful in its twin objectives of promoting exports and employment. Total exports from EoUs are likely to be nearly Rs 1,25,000 crore in the current fiscal.

The EoUs export 90 per cent of the goods produced. In the past five years, these units have shown an average growth of 31 per cent while creating employment for around 1.80 million people.

"The move will ensure that investments in EoUs continue," said LB Singhal, director general, Export Promotion Council for EoUs and SEZs.

To facilitate easier norms, EoUs will now be allowed to pay excise duties on supplies to the domestic tariff area (DTA) on a monthly basis. Previously, they had to pay the duty on each consignment sent to the DTA.

In another move aimed at increasing the competitiveness of Indian exporters, the government has also relaxed norms for availing the benefits of the Export Promotion Capital Goods (EPCG) scheme, which is used by exporters to import capital goods at lower import duty.

Customs duty for import of goods under the scheme has been reduced to 3 per cent from 5 per cent. Moreover, exports made to fulfill the conditions under the EPCG scheme have been made eligible for export promotion schemes. Also, the export obligation for sectors that have seen a decline of more than 5 per cent in exports in 2007-08 will be reduced.