Keeping up with efforts to influence the Finance Ministry to hear the needs of the exim community, the Confederation of Export Units has sought continuation of tax holiday under sunset clause, exemption from sales tax and various state taxes and levies and a treatment on par with special economic zones in the next budget.

I believe that this is indeed a strong point as elimination of tax holiday of the Income Tax Act would affect fresh investments in the sector. Moreover, I feel that this provision should continue without any time limit.

The Finance Ministry should seriously consider deleting the sunset clause and EOUs should be extended the same income tax benefits as are available to Special Economic Zones.

To help the EOUs Mr. Chidambaram can even work out a provision where the entire profits of cent percent EOU undertakings can be exempted from income tax.

If we remember the UPA's Foreign Trade Policy exempts service tax for EOUs, but the Department of Revenue is yet to notify the same.

The EOUs thus have to avail the service tax credit and utilise it for payment of excise duty on domestic tariff area sales or claim the rebate under Central Excise Rules or claim refund under CENVAT credit rules.

What I fail to understand is the logic behind this – when there is exemption of excise duty and custom duty, why can’t there be an exemption for service tax too.

Other areas where the Finance Ministry can give a thought are the abolition of all state cesses, taxes, duties and levies.

The government has to create proper conditions to promote and protect the interests of the EOU sector. And this is probably the best time to show that the govt. cares!