“At present, the number of taxes, including VAT, octroi, electricity duty are borne by exporters. They should be rebated or refunded, and I will urge state governments to look into this issue carefully,” Finance Minister P Chidambaram said at the 54th meeting of the National Development Council.

Mr Chidambaram said any state which relieves exporters of tax burden tends to gain as more exporters oriented industry would locate there. “Hence, it is in the long term interest of the state to rebate or refund all taxes on exports,” the finance minister said.

Goods and services

Stating that exports are under some stress due to the rapid appreciation of the rupee against the weak dollar, Mr Chidambaram said, the Centre has announced major relief packages and we are hopeful that these will bring some measure of relief to exporters.

However, regardless of the exchange rate, or any other external circumstance, it is an universally accepted principle that taxes would not be exported, he observed.

“The central government rebates or refunds every tax that is payable or paid and if attributable to goods and services that are exported. I submit that state government should do the same,” Mr Chidambaram pointed out.

The finance minister said unless the Eleventh Plan target of each of infrastructure areas like roads, ports, railway line and power plants are achieved, it would be difficult to reach the goal of 10 per cent GDP growth in the terminal year of the plan.