./.WORLD TRADE
ORGANIZATIONG/SCM/N/71/IND
19 October 2001
(01-5138)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
New and Full Notification Pursuant to Article XVI:1 of the GATT 1994
and Article 25 of the Agreement on Subsidies and
Countervailing Measures
INDIA
The following communication, dated 16 October 2001, has been received from the
Permanent Mission of India.
_______________
Please refer to India's notification pursuant to Article XVI:1 of the GATT 1994 and Article 25
of the Agreement on Subsidies and Countervailing Measures, as contained in document
G/SCM/N/38/IND dated 10 May 1999.  Pursuant to Article 25 of the Agreement on Subsidies and
Countervailing Measures, the amendment to the above notification concerning Income Tax
concession on export of goods from India is indicated below:
1. Nature and Extent of the Subsidy
(a) Background and authority
This subsidy is provided under Sections 10A, 10B and 80 HHC of the Income Tax Act 1961,
with a view to improving the foreign exchange reserves of the country.
(b) Incidence
With effect from the assessment year 2001-2002 manufacturing units in export processing
zones, special economic zones and 100 per cent export oriented units are allowed 100 per cent
deduction of profits and gains from export of articles/things or computer software.  This deduction is
available for a period of 10 consecutive assessment years in a graded manner.  The deduction isgranted with reference to the assessment year relevant to the previous year in which the undertaking
begins to manufacture or produce articles or things or computer software.  Thus an undertaking set up
on or before 31 March 2000 shall be entitled to a deduction for a period of 10 years, that set up during
the period 1 April 2000 to 31 March 2001 for a period of 9 years, that set up in 2001-2002 for a period
of 8 years and so on.  No deduction shall be allowed for the assessment year beginning on1 April 2010 and subsequent years.  This deduction can be availed subject to fulfilment of certain
conditions specified in this regard.G/SCM/N/71/IND
Page 2
A taxpayer, whether a trader or manufacturer is entitled to a deduction from the gross total
income to a specified extent of the export profits.  The percentage of deduction will be 80 per cent,
70 per cent, 50 per cent and 30 per cent for the assessment year 2001-2002, 2002-2003, 2003-2004
and 2004-2005 respectively.  No deduction shall be allowed in respect of the assessment year
beginning on 1 April 2005 and subsequent assessment years.
It may be noted that the assessment year is the year following the financial period, also called
a previous year, in which income is earned.
(c) Amount of subsidy
Data not available.
(d) Estimated amount per unit
Not feasible.  It varies from unit to unit depending upon its turnover and profitability.
2. Effect of Subsidy
(a) Estimated quantitative trade effect of the subsidy;  and the reasons why it is considered that
the subsidy will have these effects:
(i) The specified percentage of deduction of export profits is allowed for export of goods
out of India to offset some comparative disadvantage against a number of local taxes
and duties which are not being otherwise rebated;
(ii) For a previous representative year, which, where possible and meaningful, should be
the latest period preceding the introduction of the subsidy or prceding the last major
change in the subsidy.
This data is not available.
__________