No tax exemption on export profits

New Delhi, March 3 The Union Finance Minister, Mr P. Chidambaram, on Monday turned down FICCI’s plea to restore temporarily the tax exemption on export profits to offset the adverse effect of appreciating rupee against the US dollar.

In his post-Budget interaction with industry associations, Mr Chidambaram said that Section 80HHC, an earlier provision in income tax law that provided tax exemption on export profits, could not be restored as it was WTO incompatible.

“I disagree with your suggestion that 80HHC should be restored. Section 80HHC was abolished in 2004, as it was WTO incompatible. All profits must be taxed. There is no reason why profits should not be taxed. We are not taxing losses. The effective tax rate is only 20.6 per cent. You get to retain the balance,” Mr Chidambaram said. Stating that the export sector needed “deeper look,” the FICCI President, Mr Rajeev Chandrasekhar, suggested that the Government must waive tax on all services used by exporters, restore 80HHC temporarily and do away with MAT for exporters for two years.

He said that the exporting fraternity needs more assistance.