Financial Daily from THE HINDU group of publications
Thursday, Apr 25, 2002

News
Features
Stocks
Port Info
Archives

Group Sites

Industry & Economy - Exports & Imports


I-T sops for exports being abused: PAC

Our Bureau

NEW DELHI, April 24

THE Public Accounts Committee (PAC) has criticised the Central Board of Direct Taxes (CBDT) for faulty and inept implementation of the plethora of export incentives and deductions scheme under the Income-Tax (I-T) Act.

In its report on export incentives and deductions in respect of profits retained for export finance, presented to Parliament on Wednesday, the Committee Chairman, Mr N. Janardhana Reddy, said that PAC's examination had revealed that though the direct tax exemptions had a positive effect on the exporters, "the Government paid a heavy price in the form of unscrupulous businessmen who channelised their unaccounted income into export profits to evade tax'', it noted.

Audit appraisal of the scheme show that though there was a net increase by more than three times in net foreign exchange realisations from 1994-95 to 1996-97 and a sharp spurt by more than two and a half times in the number of beneficiaries, "irregular concessions to exporters in 1,273 cases out of 6,680 cases'' test-checked showed short-levy of tax of Rs 438.74 crore, constituting 16 per cent of total revenue concession.

Out of 6,509 cases covered under Section 80 HHC (export profit) and test checked, the audit detected 1,221 cases of irregular deductions involving Rs 546.07 crore with a revenue effect of Rs 370.51 crore constituting 13 per cent of revenue foregone as a direct result of irregular deductions/reliefs and concessions, PAC said.

The PAC said that it could not but express its ``dissatisfaction'' over the fact that it took the Government 16 long years to set up an expert committee to examine the efficacy of the provisions of the Income-Tax Act offering special fiscal benefits for export of goods or merchandise. It said it was in "agreement'' with the findings of the expert committee appointed by the Department of Revenue which concluded that misuse of incentives and benefits had resulted in unscrupulous exporters enjoying the subsidised credit facilities given by the Government who utilised their huge unaccounted tax-free profits "not for export-oriented activities but for leading a lavish lifestyle and other supposedly lucrative businesses, like shares, construction activity and film production''. PAC hoped that the department would take appropriate remedial measures on the findings of the expert committee to plug the loopholes.

PAC said that audit had observed that under the Exim Policy (1992-97) the industrial units in free trade zones (FTZs) were liable to pay excise duty at a concessional rate on the goods sold in the domestic tariff area (DTA). But the Revenue department could not explain to the committee why goods sold by such units in DTA could be treated as exports for availing the benefit of Sections 10A and 10B of the I-T Act.

As such, PAC said that tax exemption for profits made from DTA sales needed "a relook'' so as to ensure that the interest of revenue was safeguarded and the provision was not "misused''.

Pointing out that there was an immediate need for effective coordination between the Ministries of Finance and Commerce, it urged the authorities to take essential remedial steps including the revamping of Internal Audit Wing in the CBDT and strengthen coordination mechanism between the Ministries of Commerce and Finance so as to keep stringent check on financial irregularities.

Send this article to Friends by E-Mail

Stories in this Section
Plan outlay for Chhattisgarh


Core sector growth rate down to 3 pc in 2001-02
Migration cited for fewer men in Kerala
EEPC seeks to tap EU sub-contracting market
Environmental awards
Kerala: `Save shola'
FICCI moots technology upgrade allowance
India, Australia keen to expand trade
Canadian province seeks investment
Govt initiative on genomics attracts good response
Survey of power consumers
Rescind passport fee hike, say travel agents
Move to improve civic amenities in Bangalore
Info terminals for students
FICCI pact to promote sports
CII draws up blueprint for better governance
Tirupur brand building gets back on track
Columbia Tristar keen to crack into AP market
Cabinet defers proposal on FDI in print media
Iffco-Kribhco pressured out of SCI race?
Ministerial meet on HPCL, BPCL sale on April 29
Gujarat violence to hurt investments: UK envoy
New Industrial Park Scheme formulated
I-T sops for exports being abused: PAC
AP: State showcases tourism potential
Govt committed to promoting tourism: Antony


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |

Copyright 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line