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May 9, 2001
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Money > Business Headlines > Report May 9, 2001 |
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Rephrasing of tax exemption to exporters to cost government Rs 5 billionSantosh Tiwary The re-phasing of withdrawal of tax exemption to the exporters would entail a revenue loss of over Rs 5 billion during the current financial year. The finance ministry sources said that though the exact amount foregone on this account would be known only at the end of the financial year, the revenue loss due to the reduction of 10 per cent in the taxable income of the exporters will certainly cross Rs 5 billion mark. For the current fiscal, the government has reduced the taxable income of the exporters to 30 per cent from 40 per cent envisaged in the Finance Act 2000, through amendments to the Finance Bill 2001. Under the provisions of the Finance Act 2000, tax exemption to exporters had to be removed over a period of five years and the exporters have already paid tax on 20 per cent of their income in 2000-01. They were required to pay tax on 40 per cent of their income in the current fiscal, and the percentage had to increase to 60 per cent, 80 per cent and 100 per cent, in the next three years. However, under pressure from the exporter lobby, Finance Minister Yashwant Sinha decided to re-phase the withdrawal provisions through backloading. Under the new provisions, the exporters will now be taxed to the extent of 30 per cent of their profits in the current fiscal and their taxable income will increase to 50 per cent, 70 per cent and 100 per cent respectively for the next three years. Sources said it was felt that considering the difficulties faced by the exporters currently, some respite to them was necessary. However, the overall withdrawal time of the tax exemption has not been changed, and in the last year of withdrawal the additional income to be taxed would be 30 per cent now, instead of 20 per cent, they added. The exporters had demanded restoration of tax exemption under section 80HHC of the Income Tax Act in the current Budget. Revenue department officials, however, said that there was no change in the government's stand at present that exporters should be brought under the tax net and all the exemptions be removed within the next few years. Powered by YOU MAY ALSO WANT TO READ:
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