The Commerce Ministry today said it will set up a committee to recast the export-oriented unit scheme so that the scheme remain attractive even after the end of tax sops in 2011. “EOUs should be re-modeled because challenges and environment have changed. So we need to re-write the rules and procedures. We are working out a committee to review it,” Additional Secretary in the Ministry D K Mittal told reporters on the sidelines of EPCES annual general meeting here.
Income tax benefits are available for exports till March 2011 and the proposed Direct Tax Code (DTC) Bill does not provide for any grandfathering clause for continuation of the tax exemption to EOUs.
Mittal, however, clarified that the committee would not take up any tax or revenue issues.
The Chairman of Export Promotion Council for EOUs and SEZs (EPCES), R K Sonthalia, said that EOU scheme could still be very good export promotion scheme which would provide duty free inputs for export on continuous basis, without licensing.
“The scheme needs to be strengthened by carrying out certain procedural simplification like doing away with the cost recovery charges and procurement certificate,” he said.
Exports from EOUs have increased to $15.45 billion (Rs 71,083 crore) in 2009-10 from $3.93 billion (Rs 18,735 crore) in 2001-02.
The EOU scheme envisages establishment of units anywhere in the country. They get certain fiscal concession to enable them to meet the rigors of foreign demand.
Mittal also asked the SEZ developers to take up their concerns on the draft DTC with the parliamentary standing committee. The government aims at implementing the DTC from April 1, 2012.
SEZ entrepreneurs have expressed serious concerns over the DTC Bill saying the proposed tax provisions would hit employment and drive away investors from the special economic zones.
The draft DTC proposes to introduce minimum alternate tax at 20 per cent on the book profit of developers as well as units from April 1, 2012, besides curtailing income tax benefits.