Com Min approaches Finance panel on state levies on exports

NEW DELHI: Commerce Ministry has asked the 13th Finance Commission to evolve a scheme for reimbursing exporters the state level taxes, which add 3-12 per cent to shipment costs making Indian products uncompetitive in the global market.

The Commerce Ministry has submitted a detailed presentation to the Finance Commission suggesting, among other things, that the Centre should be allowed to reimburse state taxes to exporters and later adjust the same from states' allocations in the resource pool.

"An appropriate provision for this may be incorporated in the final recommendations of the Finance Commission," the communication from the Commerce Ministry said.

The Finance Commission is a constitutional body that defines the formula for devolution of resources between the Centre and states.

The 13th Finance Commission, headed by Vijay Kelkar, is in the process of reviewing the devolution formula.
While there are provisions to reimburse central indirect taxes such as customs duty and excise duty by way of several duty exemption schemes, state-level duties like central sales tax, electricity duty, sales tax on petroleum products, octroi, mandi tax and entry tax have a "significant impact on the cost of export products".