8-digit level of customs, excise classification may be accepted

New Delhi, February 7: | Updated: Feb 8 2002, 05:30am hrs
The commerce ministrys proposal for adopting an 8-digit classification for levying customs and excise duties, mooted in the medium-term export strategy, is likely to find a place in the upcoming Budget.

The move will give greater flexibility to the government in adjusting the duty structure in response to the changing situations, besides being World Trade Organisation (WTO)-compatible. At present, the classification for imposing customs and excise duties is based on a 6-digit level.

The ministry also expects the finance minister to grant complete exemption on food and farm product exports with a view to sharpening their competitive edge in the global market.

Another ministry proposal for levying higher customs duties on items, which are free from quantitative restrictions, and lowering on other items may also find favour with the North Block.

The ministry is also hopeful that its suggestion for adopting a lenient view on taxing the export income during 2002-03 under section 80-HHC of the Income-Tax Act of 1961, in view of the continuing global slowdown, which was aggravated post-September 11 fallout, will come through.

During the first nine months of this fiscal exports registered a positive, though meagre, 0.64 per cent growth over the same period last year.

During his pre-Budget meeting with finance minister Yashwant Sinha on January 18, commerce and industry minister Murasoli Maran had strongly taken up various proposals aimed at speeding up the momentum of export growth during the next fiscal. He had also raised the issue of commodity-related problems in the context of the general decline in the world commodity prices, especially in the plantation sector, and measures to improve the same.

The current Budget conceded some reliefs for the exporting community for charging a lower rate of income tax on their forex proceeds under section 80-HHC and also granted a 10-year tax holiday for the special economic zones being set up.

Thereafter, under the revised Exim policy for 2001-02, the concept of agri-export zone was introduced to give a boost to farm exports, removed QRs on the remaining 715 tariff lines, created a war room in the ministry for constantly monitoring imports of 300 sensitive items and continued the duty entitlement passbook scheme till March 31 this year.