The government Friday clarified that an undertaking set up in the domestic tariff area that is subsequently converted into a 100 percent export-oriented unit will also qualify for benefits under the Income Tax Act.

Commerce Minister Kamal Nath had announced the concession in the Foreign Trade Policy last year, which has now been notified after the issue was taken up with Finance Minister P. Chidambaram, officials said.

For getting benefits under section 10 B of the Income Tax Act, a unit should be deriving profit from the export of articles or computer software manufactured or produced by it.

But the deduction will be available only from the year in which the unit got the approval as a 100 percent export-oriented unit, and restricted to a period of 10 years from the year in which the unit started manufacturing the articles.

Moreover, in the year of approval, the deduction shall be restricted to profits derived from exports and will cease after the assessment year 2009-10 - the sunset clause for such benefits, an officials said.