The Hindu : Business : Bill for tax relief on DEPB passed

Online edition of India's National Newspaper
Thursday, Dec 15, 2005

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Business

Bill for tax relief on DEPB passed

Special Correspondent

Exemption limit remains unchanged at Rs. 10 cr.

NEW DELHI: The Lok Sabha on Wednesday approved a Bill to amend taxation laws so as to exempt about 60,000 small exporters from the levies under the Duty Entitlement Pass Book (DEPB) scheme. The BJP members, however, staged a walkout in protest against the Government's decision not to raise the scheme's Rs. 10-crore exemption limit.

In his reply to the queries raised by many members on the provisions of the Bill, Finance Minister P. Chidambaram said: "The exemption limit of Rs. 10 crore is based on a thorough study by legal and economic departments and is based on the recommendations of the Economic Advisory Council.''

Not happy with the Finance Minister's reply, the BJP members sought an increase in the exemption limit as it would then help a larger number of exporters. However, with Mr. Chidambaram insisting on retaining the limit, they staged a walk out.

Arguing why he could not raise the exemption limit further, Mr. Chidambaram said: "I have to protect the interest of small exporters as well as revenue. I think we have struck a balance.'' Moreover, he had to consider the revenue aspect keeping in mind the mega social sectors programmes.

He pointed out that the EAC, headed by C. Rangarajan, had submitted its report to Prime Minister Manmohan Singh and its recommendations were accepted by the Government and incorporated in the Bill.

The Bill is aimed at extending tax incentives to export business with effect from assessment year 1998-99 under the DEPB and DFRC schemes.

It also includes amendments to exempt from income-tax, any payment received in respect of a lease of an aircraft or aircraft engine by government of a foreign state or enterprise.

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