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Finance Ministry still to issue circular on service tax waiver
May, 03rd 2007
Exporters want Prime Minister to intervene

What was seen as the single biggest concession for the exporting community in the recently announced Foreign Trade Policy statement may now turn into a damp squib.

The enabling notification by the Finance Ministry, sealing the announced relief on service tax for exporters, for services rendered abroad, has still not come, though (as per the FTP statement) the Revenue Department has sought 30 days time (from April 19) for issuing the circular to make the relief operative.

It is learnt that while the Finance Ministry has been taken by surprise by the announcement on tax waiver on April 19, the Commerce Ministry is claiming to have received the Prime Minister's clearance for the same.

Exporters' worry

The Engineering Export Promotion Council (EEPC) has sought the intervention of the Prime Minister, Dr Manmohan Singh, to resolve the problem, which has raised alarm bells among exporters who already feel that an export target of $160 billion for 2007-08 was perhaps quite steep, given that the amount achieved for 2006-07 was $125 billion.

Mr Rakesh Shah, National Chairman of EEPC, said that the council, in a recent letter, has urged the Prime Minister to request the Finance Ministry to "issue the necessary circular in the letter and spirit of the policy commitment made in the Commerce Minister's statement made on April 19."

Mr Shah, in his representation, has said: "Unfortunately, within a couple of days of announcement of the Annual Supplement, reports indicate that the Finance Ministry is against such an exemption of service tax on export-related services rendered abroad, and may not issue the necessary circular."

He added that it is the credibility of the Government would be at stake if their own policy statement were not acted upon.

In the case of indirect duty revisions that the Finance Minister makes on Budget day every year, notifications are issued immediately for the revised levies to come into effect from midnight the same day.

"In this case too, a similar notification should have been issued."

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