IT dept. reopens cases

NEW DELHI: Tax on the benefits exporters get from duty entitlement pass book (DE-PB) scheme is snowballing into a major issue facing the country''s export drive.
Tax returns of thousands of exporters for the past several years, which had been already assessed, are being reopened by the I-T department and huge demands are being raised on exporters with retrospective effect, with interest, members of the Indian Silk Export Promotion Council said.
"Exporters are scared, nervous and are unable to pay attention to their export business," council chairman Bimal Mawandia said.
Under the DEPB scheme, exporters are given duty credits as per specific rates fixed for export products. The duty credits can be used for import of inputs going into export production.
The DEPB scheme was introduced in 1997 as an alternative to the duty drawback scheme which provides refund of customs, excise duties suffered by export products. The benefits to exporters under this scheme have been exempt from I-T.
Although the DEPB scheme has been in operation for seven years, the I-T department has started denying tax exemption to DEPB proceeds only recently, because Section 28 of the I-T Act did not specifically mention DEPB as a tax-exempt scheme.
The exporters claim that since DEPB is an alternative to a scheme which enjoyed tax exemption, they should not be made to pay tax, that too with retrospective effect, on the DEPB benefits.