Exporters will have to reconcile themselves to paying income-tax on their export profits. The UPA government is in no mood to restore I-T benefits under Sections 80 HHC and 80 HHE, which have been fully phased out. The tax break extended to exporters for well over two decades lapsed on March 31, '04. Although there have been demands to restore this benefit with retrospective effect, the government is unlikely to accede to it.

A restoration of the benefit would mean reviving the sunset clause. This may not happen, given that the government is taking a hard look at scrapping exemptions to raise more resources.

Many exporters have already shifted to alternatives like the EOU (export-oriented unit) scheme or the STP (software technology park) scheme, which provide tax holidays under other sections of the Income Tax Act. Throughout the phase-out period for Section 80 HHC, exporters have been seeking restoration of this popular exemption. While the previous government was firm on phasing out this sop, exporters had argued that its restoration was necessary to compensate for the appreciation of the rupee against the dollar. However, even this argument does not hold good now, since the rupee is back on its depreciation path.

Along with Section 80 HHC, the tenure of over a dozen sunset clauses - a pre-determined expiry of a provision in the income tax legislation - ended on March 31, '04. These include income tax deduction on profits from export of computer software (80 HHE), deduction on profits from projects outside India (80 HHB) and housing projects (80 HHBA), as well as tax breaks on earnings in convertible foreign exchange (80 HHD).

Besides exporters, companies carrying on scientific development and research and development have to fork out tax. Companies undertaking R&D were entitled to a 100% deduction for 10 years under Section 80 IB (8A). But the benefit had ceased from April 1, '04.