Exporters allege harassment – not from Customs but from Income Tax
Yesterday we carried a news story about the travails of the exporters who are now stuck with demands from Income Tax authorities on the sale of DEPB. Under Section 28 of the Income Tax Act the following are classified under profits:-
1. Profit on sale of licences (under Exim Policy)
2. Cash assistance for exports
3. Drawback
Under Section 80 HHC export profits are allowed as a deduction. This concession is to end with this financial year. The problem of the exporters is that Section 28 does not mention DEPB and Section 80HHC does not take into consideration losses, both of which they want to be rectified with retrospective effect. But Income Tax authorities seem to be serious in collecting their arrears. The exporters who had availed these benefits are doomed if the taxmen proceed to collect the arrears! Contrary to common belief, exporters don’t earn huge profits to meet the retrospective demands of the taxmen. North Block is indeed a potential repository of possible Tsunamis for the Indian businessman.