Sunset clause to EoUs may end in 2011

The government may not review the extension of the Sunset Clause to the Export-oriented Units (EoUs), after the deadline expires on March 31, 2011.

Small export houses had been pitching for fiscal benefits to EOUs beyond March 31, 2011, as the units get 100 per cent tax benefits under Section 10B of the Income Tax Act, which in turn entails that they do not need to pay any income tax.

“There is no discussion on this (extension of sunset clause) now, and it might not be considered,” Rahul Khullar, Union secretary for commerce and industries said at an interactive session here.

“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 Rajiv Maheshwary, Vice President-Commercial, Vision Rx Lab Private Ltd.

Exports from SEZs stand at Rs 2,20,711 crore in 2009-10 and investments stand at Rs 1, 48,488 crore as on March 31, 2010, Khullar said.

Raman Chopra, Director, Central Board of Direct Taxes, who was also present at the interactive session, said that comments on to the revised discussion paper on DTC would be considered.

“SEZs have developed a lot and not all of it is due to IT benefits and simply saying the withdrawal of these benefits will turn the whole growth picture around is not right,” he said.