New Delhi: With the Finance Ministry opposing extension of tax incentives for the export-oriented units (EoUs) beyond March 2009, Commerce and Industry Minister Kamal Nath will take up the issue with Prime Minister Manmohan Singh in the next fortnight.
As of now tax exemption to 100% EoUs is available for exports up to 31 March 2009. However, the ‘Sunset Clause’ under Section 10B of the Income-Tax Act envisages that EoUs would cease to avail tax incentives after March 2009.
Exporters have been demanding scrapping of ‘Sunset Clause’ so that they could continue to enjoy tax holiday. The Commerce Ministry has been pressing for extending the tax incentives beyond 2009 with the Finance Ministry without success. “We have not given up the efforts and we will discuss the issue with the Prime Minister in the next fortnight,” Nath said at a conference of the Export Promotion Council for EOUs and SEZs.
Nath said all the government departments should realise that the special economic zones would be crucial when the Indian economy becomes more open after a slew of free trade agreements coming into force. He asked the SEZ and EoU developers to persuade the Finance Ministry as well for tax incentives such as removal of minimum alternative tax (MAT).
“You find it easy to corner me but you will have to improve your persuasive skills with the Finance Ministry as well,” he said. Asked whether the government would offer any more package to exporters, Nath said the exports provided crucial part of the economic growth. “We are continuously looking at efforts to see that export growth does not drop,” he said.