Shopper's Stop Limited - Securities and Exchange Board of India

phased manner, gradually allowing higher levels of foreign participation in Indian companies.
However as per the current Central Government policy on foreign direct investment, foreign direct
investment in Indian companies carrying on business in the Indian retail trading sector is prohibited.
FISCAL REGULATIONS
In accordance with the I.T. Act any income earned by way of profits by a company incorporated in
India is subject to tax levied on it in accordance with the tax rate declared as part of the annual
budget passed by the Parliament.
Our Company like other companies avails of certain benefits available under the I.T. Act. For
details of the tax benefits see 'Statement of Tax Benefits' on page 157 of this draft Red Herring
Prospectus .
Further the import of some of the merchandise stocked at our stores involves the levy and payment
of customs duty in accordance with prevalent rates prescribed in the Customs and Excise Act 1962
and the Central Excise Act 1944 and rules and notifications issued there under from time to time
and obtaining a license under the provisions of the Export Import Policy 2002-2007.
Value Added Tax (VAT)
In terms of the policies enumerated in the Central Government ‘s proposed budget for the current
fiscal year Implementation of VAT is scheduled to be completed within this fiscal year. VAT levy will
be administered by the Value Added Tax Act and the rules made there-under. It will replace the
present levy of sales tax. Under the current single-point system of tax levy, the manufacturer or
importer of goods into a State is liable to sales tax. There is no sales tax on the further distribution
channel. VAT, is a multi-point levy on each of the entities in the supply chain with the facility of setoff
of input tax - that is, the tax paid at the stage of purchase of goods by a trader and on purchase
of raw materials by a manufacturer. Only the value addition in the hands of each of the entities is
subject to tax.
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