“Government has issued a notification providing refund of service tax paid by exporters on four taxable services, which are not in the nature of input services but could be linked to export goods,” said a finance ministry statement.
The government collects 12 per cent service tax along with 3 per cent education cess on services.
Exporters already get refund of service tax paid by them on input services used for exports. Drawback scheme also factors service tax paid on input services used for exporting goods.
Rupee appreciation
In July, the finance ministry had provided a financial package of Rs 1,400 crore to exporters, especially to textile, handloom, handicraft and other labour-intensive industries, to cushion the impact of rupee appreciation. The Indian unit has appreciated by over eight per cent since January this year.
Although Commerce & Industry Minister Kamal Nath had announced government’s intention to exempt exporters from service tax in the April supplement of Annual Foreign Trade Policy, the finance ministry took about six months to issue a notification in this regard.
Since the exemptions would help exporters save a substantial amount paid as service tax, basically on the movement of export consignments through road, railway and ports, the government is hopeful that it would help in meeting the export target of $160 billion in 2007-08. Finance Ministry officials were not sure about the revenue implications of the notification, but said it would provide a major relief to all exporters, especially those who have to move bulk of goods through road, rail or ports. Federation of Indian Export Organisations (FIEO) President Ganesh Gupta said: “The notification hardly meets the bonafide demand of trade and industry for zero tax rate on exports.”
New duty plan soon
Coonoor (Tamil Nadu), PTI: The government is in the process of formulating an alternative duty neutralisation scheme for exporters and will announce the new scheme soon, Commerce & Industry Minister Kamal Nath said on Monday.
“The new scheme is in the final stage. It will be announced soon,” he said, speaking at the annual conference of United Planters’ Association of Southern India.
The Duty Entitlement Pass Book (DEPB) scheme was to expire this year and was extended for another year till March 31, 2008.
The commerce ministry had asked the National Council of Applied Economic Research (NCAER) and the Economic Law Forum to work out an alternative scheme, which would neutralise all levies - customs and excise duties along with state levies, while being WTO compatible.