Exporters are paying tax on 30 per cent of their income during the current financial year and, according to the current schedule, they will have to pay tax on 50 per cent of their income during the next fiscal, on 70 per cent during 2003-04, and on 100 per cent from 2004-05 fiscal.
Senior government sources said that keeping in mind the poor export situation, the government would certainly consider providing relief to exporters in the next financial year by reducing the additional tax burden to be imposed on them from the next fiscal. The sources also said the reduced burden could be backloaded or the period for removal of tax exemption could completely be extended to achieve this.
The schedule introduced in the 2000-01 budget, under which tax exemption to exporters had to go in five years by bringing 20 per cent of their income under tax net every year, was altered at the beginning of this fiscal to provide relief to exporters. Amendments to the Finance Bill 2001 had reduced the additional 20 per cent income to be brought under the tax net to 10 per cent. As a result, exporters are required to pay tax on 30 per cent of their income during this fiscal as against on 40 per cent envisaged by the earlier schedule. The relief provided this year has been shifted to the financial year 2004-05.
Sources said that considering the fact that the exports had failed to pick up in last few months and the chances of a quick recovery was highly unlikely, additional tax burden on exporters in 2002-03 was likely to prove counter productive.
As per the latest government figures, Indias exports registered a negative 1.95 per cent growth during the first half of the current fiscal over the same period of last year.
The decline in growth rate was mainly due to the ongoing demand recession at home and abroad and the recent terrorist strikes in the US.
The disappointing performance in the first half has put a question mark on the commerce ministrys target of achieving 12 per cent export growth in dollar terms in the current fiscal. Exports during the period April-September, 2001, were valued at $20,967.81 million against $21,385.65 million during the corresponding period of previous year.