Interest income of a 100% EOU

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This query is : Resolved

SREE PRAKASH (Querist)

24 October 2007 Kindly clarify the following
1.A 100% EOU receives interest on deposits ade with customs dept. Is it taxable ?
2. What about exchange difference income?

S.RAVICHANDRAN

S.RAVICHANDRAN (Expert)

25 October 2007 Now the export oriented units and other units are same in income tax point of view. Section 80 HHC was gradully reduced percentagewise and made it to "NiL".

Therefore the interest income is very much taxable. However the deduction under section 80-L is available upto Rs.13000/-

The exchange difference income can be accounted for as " Sales " itself in terms of Accounting standard 11 and Revenue Recognition AS 9.

Sindhu

Sindhu (Expert)

25 October 2007 Section 80L is no more applicable from the assessment year 2006-2007 .

and to add on if the interest earned is treated as income from business then it will certainly be exempt. Since it is a deposit with the customs department it would be considered so.(basically income earned during teh course of the business)

Foreign exchane gains is to be shown in P&L account .. preferrably separately

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