Pre-budget meet: Export bodies suggest ways to boost global trade

The current service tax refund mechanism is a cumbersome process. The government should exempt the service tax for exports on purchase of capital goods from indigenous manufacturers under EPCG scheme The Dollar Business Bureau

The government should consider the inverted duty structure in respect of various items as it not only affects exports but also the manufacturing sector

Several industry bodies on Wednesday proposed to the government some additional measures including a continuation of certain tax exemptions to expand manufacturing capacity and encourage exports. In its pre-budget meeting with the Finance Minister Arun Jaitley, the Engineering Exports Promotion Council (EEPC) recommended that the corporate tax rate should be brought down to the MAT rate of 18% or export income should be taxed at the MAT rate to phase out the tax rate deductions. “While at a conceptual level, the logic of having corporate income tax at 25% along with no deductions seems fine, we must keep into account the fact that India’s industrial, especially, the manufacturing sector accounts for a meager 16% of GDP,” EEPC Chairman T S Bhasin said. The apex body also demanded an exemption of income tax on the profits derived on transfers of MEIS and SEIS allowed under the FTP. “The CBDT should issue a clarification that TDS on foreign agent’s commission is exempted as the issue has been hanging for a long time and causing a lot of hardship for the exporters,” the council said. The Federation of Indian Export Organisations (FIEO) asserted that the current service tax refund mechanism is a cumbersome process, and the government should exempt the service tax for exports, at least the Terminal Excise Duty (TED), on purchase of capital goods from indigenous manufacturers under EPCG scheme. The exporter body also urged the government to consider the inverted duty structure in respect of various items “as it not only affects exports but also the manufacturing sector and adversely hit Make in India”. Underlining the urge to encourage the country’s MSME sector, FIEO said the government needs to chip in with liberal funding as the sector lacks financial resources to meet their costs. “In view of current down fall in exports, encouragement to MSME sector by way of fiscal incentives on their year-on-year export growth would motivate them for aggressive export marketing, which in turn could help in restoring export momentum. The government may create an Export Development Fund (EDF) to support them on this front,” FIEO said in a statement. The Federation of Indian Chambers of Commerce and Industry (FICCI) also pitched a need to encourage MSMEs and start-ups, in order to create large livelihood opportunities in the country. “Employer’s contribution towards employment benefits like PF and ESI should be paid by the government for the start-up businesses for a defined period of three to five years,” FICCI said. Insisting on the need to promote entrepreneurship in smaller towns, the Associated Chambers of Commerce & Industry of India (ASSOCHAM) said the government should enlist tax breaks similar to IT parks, for “startup hubs” in each city for all kinds of businesses, especially service and professional businesses.

January 07, 2016 | 02:15pm IST

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The Dollar Business Bureau - Jan 07, 2016 08:47 IST

Pre-budget meet: Export bodies suggest ways to boost global trade

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