Tax breaks for DTA firms-turned-EOUs

Manufacturing and service units set up in the domestic tarrif area (DTA), but later converted into export-oriented units (EOUs), will be eligible for tax exemptions till 2009-10.

In a circular issued by the Central Board of Direct Taxes (CBDT), the government has clarified that undertakings in DTAs, which converted themselves to 100% EOUs, will qualify for tax benefits as offered to other EOUs under Section 10B of the Income Tax Act.

"The deduction would be available only from the year in which the unit gets approval as 100% EOU," an official release said today.

The tax benefit would be available for the remaining period of 10 consecutive assessment years beginning from the period it started manufacturing in the DTA.

CBDT further said the deduction shall be restricted to the profits derived from exports after the unit converted into a 100% EOU.