SEZs, EOUs too may get sops for rupee rise
The commerce department has taken up the issue with the finance ministry and the announcement to include such units is likely to be made when a new package is announced later this month.
By Amiti Sen, TNN |
NEW DELHI: The government is likely to allow certain special economic zone (SEZ) units and export oriented units (EOUs) to avail of benefits provided to exporters through the recent package aimed at cushioning the appreciation of the rupee. SEZ units and EOUs get a variety of tax sops which are not available to other exporters.
Therefore, both segments were originally kept out of the rupee package. The Centre is considering including those SEZ units and EoUs in the package which, at present, are no more eligible for tax sops under the SEZ and EoU rules.
Sources said the change in the government’s stand follows the recognition that EOU sops are being phased out and SEZ units too need benefits to tackle the appreciating rupee. “Since the logic of excluding SEZ units and EoUs was that they were already enjoying tax benefits, there is every reason to extend the package to units in the zones which are not enjoying those benefits,” an official said.
SEZs, for example, get full tax exemption for five years only. Similarly, the tax holiday for EOUs is valid only for 10 years. Therefore, SEZ units launched before 2002 and EOUs launched before 1997 do not get full tax exemption now. The current move, therefore, will benefit such units.
The commerce department has taken up the issue with the finance ministry and the announcement to include such units is likely to be made when a new package is announced later this month. A proposal for a new package has already been circulated for consideration of the Cabient Committee on Economic Affairs (CCEA).
The package announced by the government for exporters includes increase in DEPB rates by 3% for textiles (including handloom), readymade garments, leather products, handicrafts, engineering products, processed agricultural products, marine products, sports goods, and toys and by 2% for the rest.
In also includes an increase duty drawback rates across product categories. Pre and post-shipment credit have been reduced by 2% and ECGC cover premium by 10%. These benefits would be available with retrospective effect from April 1, 2007 and continue till December 31, 2007. The government is now working on a revised package for exporters.
Therefore, both segments were originally kept out of the rupee package. The Centre is considering including those SEZ units and EoUs in the package which, at present, are no more eligible for tax sops under the SEZ and EoU rules.
Sources said the change in the government’s stand follows the recognition that EOU sops are being phased out and SEZ units too need benefits to tackle the appreciating rupee. “Since the logic of excluding SEZ units and EoUs was that they were already enjoying tax benefits, there is every reason to extend the package to units in the zones which are not enjoying those benefits,” an official said.
SEZs, for example, get full tax exemption for five years only. Similarly, the tax holiday for EOUs is valid only for 10 years. Therefore, SEZ units launched before 2002 and EOUs launched before 1997 do not get full tax exemption now. The current move, therefore, will benefit such units.
The commerce department has taken up the issue with the finance ministry and the announcement to include such units is likely to be made when a new package is announced later this month. A proposal for a new package has already been circulated for consideration of the Cabient Committee on Economic Affairs (CCEA).
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EoUs enjoy tax sops for 10 years, so all such units which have been set up prior to 1997 will benefit from the move. Sources said that there are about 2,000 EoUs which could benefit from the exporters’ package. Similarly, in the case of SEZs, all units set up in zones established prior to 2002 (since SEZ units get 100% tax refunds in the first five years), could benefit from the move. This would include units in all the seven export processing zones which were converted into SEZs.The package announced by the government for exporters includes increase in DEPB rates by 3% for textiles (including handloom), readymade garments, leather products, handicrafts, engineering products, processed agricultural products, marine products, sports goods, and toys and by 2% for the rest.
In also includes an increase duty drawback rates across product categories. Pre and post-shipment credit have been reduced by 2% and ECGC cover premium by 10%. These benefits would be available with retrospective effect from April 1, 2007 and continue till December 31, 2007. The government is now working on a revised package for exporters.
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