More extension of sunset clause needed: EPCES

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Namrata Kath Hazarika | 10 Jul, 2009
The extension of the sunset clause in the recent Union Budget under Section 10B of the Income Tax Act by one year for the 100 percent Export Oriented Units (EOUs) will on one hand help existing EOUs to combat the adverse circumstances, but on the other hand will hinder fresh investment to operate under EOUs, said a senior official from the Export Promotion Council for EOUs and SEZs (EPCES).

L.B. Singhal, Director General of EPCES told SME Times, "100 percent EOUs are entitled for exemption of income tax act which was available to them up to March 31, 2010 has been extended to March 31, 2011."

He said, "The request has been accepted by the finance minister as the sunset clause has been extended by one year in the recent Union Budget which would help the operational EOUs for combating the adverse circumstances for one year. However, it has been observed that no fresh investment will come under EOUs."

Singhal further said that the council had earlier requested the finance ministry to extend the sunset clause by maximum five years or minimum three years.

He pointed out, "A person would be making new investment only if there are some long-term perspectives."

"If you are taking a decision of invest or set up a factory, it usually takes time. So, the income tax exemption period would be over till the time an entrepreneur would set up a venture," he said.

"This would be helpful for the 2,546 operational EOUs, but there would not be any fresh investments. New factories or investments will only come when they are sure of the future," Singhal added.