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The
commerce department is looking at the possibility of
introducing a new scheme for offsetting taxes that
are not being reimbursed by states in this year’s
foreign trade policy. It is also exploring the
option of factoring the taxes
into
the existing input duty neutralisation schemes like
duty drawback and DEPB (Duty Entitlement Passbook
Scheme) by increasing the reimbursement rates, a
government official has said. Interestingly, the
measures to be taken for reimbursing the state-level
taxes to exporters are also tied to the structure of
the proposed goods & services tax (GST) being
worked out between the Centre and the states. In the
GST, which is scheduled to be implemented from the
next fiscal, there could be some taxes imposed by
the municipal department like Octroi and purchase
tax, which may not be subsumed in it.
Moreover, there is still no clarity on the issue of
how the state-level GST will be reimbursed to
exporters (whether it will be exempted or refunded
and who will refund it). “While the GST does
provide for zero-rating of taxes for exporters, we
do not yet know how it will be done. There also has
to be some arrangement in the interim period, till
the GST is implemented, for reimbursement of state
taxes. All this is being looked at by the
government,” the official added. With the ongoing
slowdown in the world market making Indian exports
increasingly non-competitive, there is more pressure
from the industry on the government to come up with
a reimbursement scheme for state taxes.
Taxes imposed at the state level like octroi, mandi
tax, sales tax on petroleum products, electricity
tax and municipal cess add up to about 4%-5% of the
production cost of exports, according to export body
Fieo.
The directorate general of foreign trade (DGFT)—the
commerce department arm directly involved in framing
the FTP—has already held a series of meetings with
industry bodies on the issue.
Source :
Economic Times - Gurgaon, Haryana, India,
dated 17/07/2009
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