The Union Government might not review or consider the extension of the Sunset Clause to the export-oriented units (EoUs), beyond the earlier set deadline of March 31, 2011. “There is no discussion on this (extension of sunset clause) now, it might not be considered,” said Dr Rahul Khullar, Union Secretary for Commerce and Industries.
Under the current dispensation, EoUs get 100 per cent benefits under Section 10B of the Income-Tax Act, which means they do not have to pay Income Tax. Should the sunset clause come into force post March 2011, EoUs might have to start paying 33 per cent tax on profits which would translate into a price rise of 10-12 per cent on their products.
Dr Khullar was speaking at an interactive session on Direct Tax Code, organised by the Export Promotion Council for EoUs and SEZ Units, here, on Friday.
“The withdrawal of sunset clause and the subsequent imposition of income tax on EoUs will add to our input costs and we will not remain competitive any longer,” said Mr Rajiv Maheshwary, Vice-President-Commercial, Vision Rx Lab Private Ltd.