Industry seeks IT benefits with retrospective effect

By MSM Desai
Film exporters want the 100 per cent penalty charged with interest on export earnings by the income tax department waived with retrospective effect from 1995. The exemptions were given under 80HHC on export earnings prior to 1995. But the IT department subsequently reversed its decision because films were not considered as tangible goods, for which exemptions are usually given.

A high power film delegation led by Rajya Sabha MP, Shatrughan Sinha and consisting of Pahlaj Nihalani, Yash Chopra, Yash Johar, Ganesh Jain, Amar Asrani, Chandrakant Mehta and SK Kapur, met union finance minister Yashwant Sinha in Delhi on June 13. They complained of the hardships the exporters were facing because of income tax department notices demanding 100 per cent penalty and interest on export earnings from 1995 till 1999.

Pahlaj Nihalani, president of the Film Exporters Association and All India Film Producers Council, told SCREEN, " We told Sinha that the industry had been pleading with the government not to charge income tax on film exports after 1995, till the government exempted them in the 1998-99 budget but the benefit was confined to the corporate sector only, and excluded individual and partnership companies. This anomaly was rectified only in the 1999-2000 budget but it was not specified from which year. As such the income tax department was demanding tax on the export earnings with effect from 1995-96. Prior to this, there was no income tax on export earnings which led to the increase in export earnings. Following the representations made by the IFEA right from 1995, exporters had not paid any tax since it was a disputed matter pending with the government.

"It is impossible for any exporter to keep a record of bills pending for four long years, and exemptions granted under 80 HHC were disputed any way. After the 1999-2000 Budget which did not specify that the exemption is with retrospective effect, the IT department was pouncing on exporters to paybig money with penalty and interest calculated for four years. But we did not pay up, because the matter was pending with the government," said Nihalani.