Service providers to gain for earning extra forex

NEW DELHI: The Finance Ministry has decided to extend a big time concession to service providers earning foreign exchange. The Exim policy will allow service providers duty-free import of capital goods and consumables up to 10% of the value of forex earned beyond the prescribed minimum limit.
The only exception would be hotels, where the entitlement for duty-free imports has been fixed at 5% of the forex earned. The sop is expected to boost the services sector which contributes roughly 48.5% of the country’s GDP. The service provider will be allowed to import against the duty free entitlement licence to be issued to him. Imports would cover capital goods, office equipment, professional equipment and consumables.
According to officials, the duty free entitlement license would be non-transferable. Sectors like health and tourism, which were provided a host of sops in the ’03-04 Budget, are expected to gain substantially from this concession. The fiscal incentives announced for the ailing tourism industry include, among other things, withdrawal of expenditure tax, service tax exemption for the hotel industry, extension of income-tax breaks to financial institutions which advance long-term capital to hotels in categories above three-star and abolition of luxury tax.