Nath's men not ready to yield on tax sops rights

NEW DELHI: The spat between the commerce and revenue departments over the relief package to be extended to exporters to cope with the appreciating rupee is now becoming territorial.

Responding to the revenue department’s letter stating that tax proposals were not the concern of any ministry other than finance, the commerce department has said that when taxes affected the country’s foreign trade, it automatically fell within the purview of the ministry of commerce & industry.

The revenue department had written a letter to the commerce department and the PMO pointing out that the commerce department had no business proposing tax sops for exporters as it fell within its purview.

“The draft Cabinet Committee On Economic Affairs (CCEA) note contains pure tax proposals and would have direct impact on tax revenue. The consequence of any tax proposal would no doubt have an impact on a cross section of trade and industry, but this in itself does not imply that taxation is a subject matter for other ministries,” the letter said.

It further said that tax proposals fall within the concern of the revenue department as per the terms of the government of India Allocation of Business Rules, 1961. Such proposals, it said, should be dropped from the CCEA note.

Speaking to ET, a commerce ministry official said the department had responded by pointing out that the same Allocation of Business Rules cited by the revenue department made all policy issues affecting foreign trade the subject matter for consideration of the commerce department.

“It is true that tax proposals are an issue to be considered by the revenue department. But to the extent it affects exports, it is our business too. We are well within our rights to suggest reimbursement of taxes which make export uncompetitive,” the official said.

The commerce department, therefore, has not made the suggested deletions in the final note on the export package to be considered by CCEA.