India to end tax incentive scheme for exporters from June 30
It is reported that Indian government has decided to end a tax incentive scheme for exporters on June 30th 2011 as the export industry in Asia's third largest economy was doing well and needed no incentives.
Mr Sunil Mitra revenue secretary said that the government faced an estimated annual loss of INR 80 billion from the Duty Entitlement Pass Book scheme, which began in 1997.
He added that "We really feel that we are rewarding exports on one hand and losing revenue on the other hand. It will be phased out on June 30th 2011. That is the finance ministry's decision."
The DEPB scheme is a tax incentive scheme for exporters under which the government reimburses about USD 1.8 billion a year to exporters on taxes paid on imported supplies.
Mr Ramu Deora president of the Federation of Indian Export Organizations said that it will still give some relief to exporters if taxes are reimbursed under the drawback scheme.
The duty drawback scheme is an export incentive scheme also offered by the Indian government that neutralizes levies paid on inputs with rates fixed annually, based on the duty structure in the budget.
Last week, trade secretary Mr Rahul Khullar said India's April 2011 exports surged by more than a third on demand for engineering goods, gems and oil products.
India's merchandise exports rose an annual 37.5% to about USD 246 billion in the last fiscal year, surpassing the initial target of USD 200 billion. The country hopes to achieve at least 25% exports growth in the 2011-12 fiscal year that ends in March, and aims to double its merchandise exports within three years.
In April 2011, the government rolled back a 2% interest subsidy paid to exporters, as it seeks to rein in fiscal deficit, estimated at 4.6% of gross domestic product in 2011-12.
(Sourced from www.indianexpress.com)
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