Lok Sabha Question No. 2817 (UNSTARRED), answered on 2016-12-02
Subject: Tax Exemptions to Exporters
Ministry: FINANCE
Asked by: AJAY NISHAD

- (a): Yes, Madam.
- (b):  The details of the tax exemption benefit provided during the last three years and the current year are as follows:-

## Direct Tax

10 A section deduction in respect of such profits and gains as are derived by an undertaking from the export of the articles or things or computer software for ten consecutive assessment years beginning with the assessment year relevant to the previous year in which undertaking begins to manufacture or produce such articles or things or computer software, as the case may be. This deduction shall not be allowed to any undertaking for the assessment year beginning on 01.04.2012 and subsequent years.

10AA section deduction in respect of such profits and gains as are derived by a unit from the export of the articles or things or providing any service by newly established units in Special Economic Zones who begins to manufacture or produce articles or things or provide any services. 100% deduction is allowed for five  consecutive  assessment  years  beginning  with the  assessment  year relevant  to  the  previous  year  in which  the  unit  begins  to  manufacture  or  produce  such  articles  or  things  or  services.  For  the  next  five consecutive  years  deduction  of  50%  on  such  profits  can  be  claimed.  This  deduction  is  available  to  unit commencing manufacture or production of article or thing or start providing any services during the previous year relevant to any assessment year commencing on or after the 1st day of April, 2006 but before the first day of April 2021.

10B section deduction in respect of such profits and gains as are derived by a 100% export oriented undertaking from the export of the articles or things or computer software for ten consecutive assessment years  beginning  with  the  assessment  year  relevant  to  the  previous  year  in  which  undertaking  begins  to manufacture or produce such articles or things or computer software, as the case may be. This deduction

## Government of India Ministry of Finance Department of Revenue

## LOK SABHA UNSTARRED QUESTION NO. 2817

TO BE ANSWERED ON FRIDAY, DECEMBER 2, 2016 AGRAHAYANA 11, 1938 (SAKA)

## TAX EXEMPTIONS TO EXPORTERS

## 2817: SHRI AJAY NISHAD:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government provides tax exemptions to Indian exporters to promote exports;
- (b) if  so,  the details thereof and the tax exemption benefit provided during the last three years and the current year; and
- (c) the extent to which such exemption has boosted exports?

## ANSWER MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (SANTOSH KUMAR GANGWAR)

shall not be allowed to any undertaking for the assessment year beginning on 01.04.2012 and subsequent years.

The tax benefits are allowed subject to the fulfilment of conditions prescribed under the respective sections.

## Indirect Tax

In  general,  goods  meant to be exported out of India are exempt from payment of central excise and service tax. Also, apart from certain commodities, there is no export duty on goods exported out of India. Further,  the  Government  of  India  has  several  schemes  in  place  that  allow  the  exporters  to  import inputs/capital goods at concessional rate of customs duty for manufacture of export goods.  In addition to above, the exporters can claim reimbursement of the customs, central excise and service tax paid on the inputs used in the manufacture of export goods.

Apart  from  the  general  export  related  customs,  central  excise  and  service  tax  exemptions  as mentioned in Part (a) above, the Government has, in the last three years, provided the following further tax exemptions to promote exports, namely-

- i. In  Budget  2016-17,  Basic  Customs  Duty  was  exempted  on  import  of  specified  fabrics,  of  value equivalent to 1% of FOB value of exports in the preceding financial year, for manufacture of textile garments for exports, subject to the specified conditions;
- ii. In Budget 2014-15, the list of specified goods required by handicraft exporters was expanded so as to include wire rolls in the same for the purpose of granting the facility of duty free import;
- iii. In Budget 2014-15, non-fusible embroidery motifs or prints were included in the list of items eligible to be imported duty free for manufacture of garments for export;
- iv. In  Budget  2014-15,  the  duty  free  entitlement  for  import  of  trimmings  &  embellishments  and  other goods  used  by  the  readymade  textile  garment  sector  for  manufacture  of  garments  for  export  was increased from 3% to 5% of FOB value of exports in the preceding financial year;
- v. In Budget 2014-15, fusible embroidery motifs or prints, anti-theft devices like labels, tags and sensors, pin bullets for packing, plastic tag bullets, metal tabs, bows, ring and slider and rings were included in the list  of  items  eligible  to  be  imported  duty free for  manufacture of  handloom made ups or cotton made ups or manmade made ups for export;
- vi. In Budget 2014-15, full exemption from Basic Customs Duty was granted to pre-forms of precious and semi-precious stones to encourage export.
7. (c):    The exemption/neutralization of domestic duties and taxes on final products exported, or of taxes borne on inputs/input service used in the manufacture of export goods, is provided so as to not export taxes with the goods. This zero-rating of taxes provides exports with a level playing field in the international market.

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