Mumbai, Feb 18: The Apparel Export Promotion Council has requested the government to restore the benefits of Section 80HHC of Income Tax Act to the extent of 100 per cent on export of readymade garments. According to a press release, this will help exporters face the challenges of a quota-free regime.Earlier, exporters were entitled to full exemption under the Act which, following the Finance Act 2000-2001, has been phased out over a period of five years at the rate of 20 per cent each year.
According to the garment exporters body, this plea is well justified as withdrawal of such benefits to Domestic Tariff Area (DTA) units, while retaining the ten-year tax holiday under Section 10A and 10B of IT Act for the EOU/EPZ units creates an anomaly.
Further, EOU/EPZ units are exempted from entry tax/local levies/sales tax etc., while others continue to bear such taxes. Besides, while EOU/EPZ are permitted DTA sale up to 50 per cent of their production on payment of duty, commitment on the part of units falling outside the purview of EPZ stands at 100 per cent.
Infrastructure and transaction cost has also become a limiting factor for small garment exporters in comparison with EOUs/EPZs which increases the cost of production and makes the pricing non-competitive in the international scenario.
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