Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: TDS :: list of goods taxed at 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: empanelment :: ACCOUNTING STANDARDS :: TAX RATES - GOODS TAXABLE @ 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: due date for vat payment :: cpt :: form 3cd :: Central Excise rule to resale the machines to a new company :: VAT Audit :: VAT RATES
 
 
News Headlines »
 Who can file tax returns under presumptive taxation scheme
 Income tax dept notifies amendments for sharing taxpayer information
 Seven things you must do before 31st March
 Income Tax saving investments: Top 5 options available for high-income individuals
 How to use zero tax rule on long term capital gains on stocks
 GST Returns - Furnishing details of inward supplies
 5 ways to maximise you income tax return
 Income-tax (2nd Amendment) Rules, 2017
 Soon, Faster PAN, An App For Filing Tax Returns
 Changes in income tax return filing process
 New Income Tax Rates And Deductions Applicable From April 1, 2017

Axe export promotion schemes, keep DEPB
December, 18th 2006

At the behest of the prime minister, the commerce minister and finance minister will jointly meet exporters in a pre-Budget meet later this month. The meeting, which will include representatives from all export promotion councils, will mainly focus on reducing transaction costs involved in administration of export promotion schemes. 
 
In this context, an idea put forward by Ramu Deora, the former chief of the Federation of Indian Exporters Organisation (FIEO) is worth serious consideration. The idea is to scrap most of the export promotion schemes, except duty drawback, and instead determine sector-wise compensation to exporters to refund/rebate the tax incidence that exporters suffer at various stages and other disabilities that constrain exports such as weak infrastructure, higher interest costs, multiplicity of taxes and inspector raj. 
 
Deora reasons that with Customs duty rates coming down drastically and with peak duty rate expected to be cut further, the DEPB (Duty Entitlement Passbook) rates are not all that high. Even the relief that duty exemption schemes give are not all that high. There is no point in elaborate documentation that these schemes entail. 
 
To get say 4 per cent DEPB, exporters have to spend about 1 per cent in transaction costs. Smaller players end up spending more in documentation procedures and greasing the channels. 
 
At present, the DEPB rates are determined product-wise. It would be better if rates are determined sector-wise, suggests Deora. It is quite easy to arrive at a single rate for say engineering goods, chemicals, textiles and so on. That way there would be fewer rates and disputes regarding whether the export product meets the given description would be eliminated. If need be, rates could be notified for sub-sectors such as drugs and pharmaceuticals, dyes and dye intermediates, basic chemicals, essential oils and so on within the chemical sector. Similarly, sub-sectors such as auto components, electrical goods etc. can be identified in the engineering sector. 
 
Once the rates are determined, the disbursement must be made through banks, who should credit the amount when the export proceeds are realised, says Deora. For example, if the rate for auto components is 4 per cent and an exporter realises Rs 1,00,000 in foreign exchange, the banks should automatically credit Rs 4,000 and claim the amount from the government. This will ensure that the 4 per cent tax rebate actually goes to the exporter. Deora has already given this suggestion to the prime minister in a meeting a few weeks back. 
 
The suggestions of Deora are similar to the Cash Compensatory Support (CCS) that the government used to give in the pre-liberalisation era. Whether grant of tax rebates in such a form will be seen as subsidies is a key issue. But the point is that even now, the DEPB and drawback rates are notified as a percentage of FOB value of exports and granted on a rather automatic basis. Secondly, a certain degree of rationalisation is warranted with a view to save on transaction costs and will do no harm, especially as the rates will be mostly around 5 per cent only. 
 
Accepting Deoras suggestions would mean that corrupt elements in the Customs and licensing offices would be marginalised and even most of the DGFTs offices would have little work. Therefore, it is unlikely that his suggestions will be accepted. Yet exporters should press for serious examination of Deoras suggestions.

T N C Rajagopalan

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Integrated Software Solutions Integrated Software Development Integrated Software Services Integrated Software Solutions India Integrated Softw

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions