Commerce ministry plans tax refund scheme for exporters hit by rupee rise

Font Size

Print

Feedback

Email

Discuss

Related Articles

Survey for CECA with developed nations, not FTAsSurvey pins hopes on economic revivalMonsoon covers entire IndiaGovt approves signing of India-Korea trade pact

New Delhi, Sep 30 : An alternative WTO-compatible mechanism for refunding taxes to exporters could be in place soon, with the commerce ministry circulating a Cabinet note proposing to merge the popular Duty Entitlement Pass Book (DEPB) scheme with the drawback scheme.

Of all the views sought by commerce ministry, feedback from the revenue department in the finance ministry will be of utmost importance, given the tug-of-war between the two ministries over a host of sops meant for rupee-hit exporters.

"We are expecting feedback by October 10, after which we would send the note for Cabinet approval," a senior commerce ministry official said.

The DEPB scheme was to expire this year but has been extended till March 31, 2008. However, an alternate scheme was to be worked out, which would neutralise all levies - customs and excise duties along with state levies, while being WTO compatible at the same time. "DEPB would be merged with the drawback scheme and all items under the scheme would be included into the new mechanism. The new scheme would reimburse state level taxes," the official said.

The new arrangement would be operationalised from April 1 2008, and reimbursement would be given on rates as prevalent on April 1, 2007.

In another move that could bring some more relief to exporters facing the brunt of a strengthening rupee, the commerce ministry has sent a list of 18-20 more services to be included in the ambit of service tax exemption. "While service tax exemption was notified on a few services, it provided only partial relief to exporters. We have sent a list of 18-20 services on which tax refund would be provided," the official said.

He said the commerce ministry is expecting a notification in this regard in October. "Our aim is to ensure that exporters are given relief and that they do not export taxes," he added.

The government has already issued a notification providing refund of service tax paid by exporters on services rendered by ports, road transport and railways. However, exporters are demanding inclusion of other services like commission to foreign agents, professional fee, foreign travelling expenses, bank charges on loans, courier services and participation in trade fares from tax exemption.