EOUs protest hike in DTA sales duty

NEW DELHI: The Union Budget has dealt yet another blow to 100% export-orient units (EOUs).

Not only is the Budget silent on the issue of removing the sunset clause on the tax sops given to EOUs, which kicks in next year, it has doubled the Customs duty on sale of goods from EOUs to domestic tariff area (DTA) from 25% to 50% in addition to the 100% additional Customs duties paid on such sales.

According to export promotion council for EOUs and SEZ Units (EPCES) chairman T Vasu, non-resolution of the issue of removal of the sunset clause under Section 10B of the Income Tax Act was disappointing.

The V Krishnamurthy committee report’s suggestion that it should be at least extended for one year was not followed.
“If the sunset clause is not removed, no exporter will like to operate under EOU scheme,” Mr Vasu said, adding that the scheme, which has given a big boost to manufacturing activities, would collapse.

EOU exporters are also disappointed that while exports from the sector have also been affected adversely due to the rupee appreciation, the package announced to exporters on this account had not been extended to EOUs.

They feel that EOUs, which have exhausted their tax concessions, were as vulnerable as other exporters and thus there was no reason to exclude them from the package.

The doubling of Customs duty on sale of goods from EOU to DTA, which comes close on the heels of imposition of a minimum alternate tax of 12.5% in the last Budget, has also upset EOUs.

“There was no need for the hike as EOUs were in any case paying additional 100% duty, which is equivalent to full central excise duty. Moreover, the MAT introduced last year has also not been removed,” Mr Vasu said.