Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
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) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: ACCOUNTING STANDARD :: ARTICLES ON INPUT TAX CREDIT IN VAT :: articles on VAT and GST in India :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: VAT Audit :: empanelment :: due date for vat payment :: cpt :: TDS :: Central Excise rule to resale the machines to a new company :: VAT RATES :: list of goods taxed at 4% :: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd
 
 
« News Headlines »
 Deadline to file returns extended to 28 August for biz with transitional
 GST input tax credit form
  How to rectify income tax returns
 Govt extends tax exemption for industry in North East, hilly states
 Should you file revised Income Tax returns; find out here
 Tax Deducted at Source (TDS) in Goods & Services Tax (GST)
 10 companies that blamed GST for soft June quarter
 How will GST impact the Indian economy
 10 days left to file your first GST return. This is how you do it
 What is property tax and how is it calculated…
 File income tax returns in time to carry forward losses

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