Ministry steps up efforts to reimburse exporters
Although the finance ministry has shot down the commerce department’s proposal of making the Centre reimburse such taxes as part of a larger duty reimbursement scheme for exporters being worked out.
By Amiti Sen, TNN |
NEW DELHI: Exporters need not yet lose hope of getting reimbursements for input taxes charged by state governments. Although the finance ministry has shot down the commerce department’s proposal of making the Centre reimburse such taxes as part of a larger duty reimbursement scheme for exporters being worked out, the commerce department does not seem to be willing to drop the idea.
The department is now suggesting that if it is not possible for the Centre to bear the burden of state taxes, then state governments should be made to fund the reimbursements either through the states’ consolidated fund or through some other mechanism.
Speaking to ET, commerce ministry officials pointed out that with exporters losing their competitiveness in the international market due to rupee appreciation, it was important to reimburse all input taxes paid by exporters including those charged by states. At present, there is no scheme which reimburses state taxes to exporters.
The commerce ministry had proposed that the popular but controversial duty entitlement pass book (DEPB) scheme could be replaced with the duty drawback scheme, as suggested by the finance ministry, provided the Centre also reimbursed state taxes including octroi, mandi tax, sales tax on petroleum products, electricity tax and municipal cess.
The finance ministry argued that neutralisation of state taxes by the central government is a departure from existing policy and practice.
The proposal is not in line with 12th Finance Commission recommendations on sharing of revenues and transfer of funds, it said.
Commerce department officials said that it did not matter where the funds came from as long as the exporters were reimbursed all input taxes paid by them.
“We are now arguing that the states should be made to reimburse the taxes. Either provisions should be made for the amount from the states’ consolidated fund or some other way should be found out,” an official said.
The proposal will be discussed with the Prime Minister’s Office (PMO) and then forwarded to the Cabinet for its consideration.
The department is now suggesting that if it is not possible for the Centre to bear the burden of state taxes, then state governments should be made to fund the reimbursements either through the states’ consolidated fund or through some other mechanism.
Speaking to ET, commerce ministry officials pointed out that with exporters losing their competitiveness in the international market due to rupee appreciation, it was important to reimburse all input taxes paid by exporters including those charged by states. At present, there is no scheme which reimburses state taxes to exporters.
The commerce ministry had proposed that the popular but controversial duty entitlement pass book (DEPB) scheme could be replaced with the duty drawback scheme, as suggested by the finance ministry, provided the Centre also reimbursed state taxes including octroi, mandi tax, sales tax on petroleum products, electricity tax and municipal cess.
The finance ministry argued that neutralisation of state taxes by the central government is a departure from existing policy and practice.
The proposal is not in line with 12th Finance Commission recommendations on sharing of revenues and transfer of funds, it said.
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Commerce department officials said that it did not matter where the funds came from as long as the exporters were reimbursed all input taxes paid by them.
“We are now arguing that the states should be made to reimburse the taxes. Either provisions should be made for the amount from the states’ consolidated fund or some other way should be found out,” an official said.
The proposal will be discussed with the Prime Minister’s Office (PMO) and then forwarded to the Cabinet for its consideration.
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