Search
Info Center
Home > Info Center > CCSE Review
Return
ReturnIndia: Customs, tax sops for textile exporters
Author：
admin
PublishDate：
2007-11-30 16:18:00
Hit：
232
NEW DELHI: The government on Thursday reduced Customs duty on polyester staple fibre and polyester filament yarn from 7.5% to 5% and on other manmade fibres from 10% to 5%.
It also gave tax exemption on three more services besides enhancing interest subsidy to provide relief to exporters in identified sectors hit by the rupee’s appreciation. Sectors benefitting from the package include leather, handicrafts, marine products and textiles.
“Leather, handicrafts, marine products and textile sectors are particularly hard-hit by the appreciation of the rupee. Exporters and industry associations met the prime minister (on the issue). I also had extensive meetings with them together with banks. Based on these meetings, we are now offering further support to exporters,” finance minister P Chidambaram said.
The rupee has appreciated 15.1% against the dollar since October 2006 — spelling doom for exporters, especially those in labour-intensive sectors.
The FM said the Centre was sensitive to the pressures on these sectors and was conscious of the need to offer support to prevent job losses and to give time to these sectors to adjust to the changing economic scenario.
Customs duty on intermediates for PSF and PFY — polyester chips, DMT, PTA (purified terepthalic acid) & MEG (mono ethylene glycol) — would be reduced from 7.5% to 5% and on paraxylene (a raw material for PTA) from 2% to nil, he said. There would be no change in Customs duty on nylon chips, nylon yarn, caprolactum, rayon grade wood pulp and acrylonitrile.
The Centre has exempted storage and warehousing services, specialised cleaning services (fumigation & disinfection) and business exhibition from service tax.
The government will provide an additional interest subsidy of 2% (2% was already being offered earlier) to exporters of leather, handicrafts, marine products and all categories of textiles, excluding manmade fibre, for pre-shipment and post-shipment credit. For the carpet sector, the term would be 270 days for pre-shipment instead of 180 days for other sectors and 90 days (like other sectors) for post-shipment.
The total interest subvention will be subject to the condition that the interest rate, after subvention, will not fall below 7%, which is the rate applicable to the agriculture sector under priority lending. This would remain valid from November 1, 2007 to March 31, 2008.
The allocation for reimbursement of terminal excise duty and central sales tax has been raised from Rs 300 crore and Rs 600 crore.
Presently, 6% interest is paid for delay in reimbursement of drawback claims beyond 30 days.
The government has decided to extend a similar provision for delays in payment of terminal excise duty and CST. The process for payment of interest will be finalised shortly, he said.
On the demand by respective councils in the textile sector for revision in drawback rates, the minister said: ”They have been asked to submit relevant data to the drawback committee which would study the proposal and make its recommendations to the government. A decision in the matter would be taken based on the drawback committee’s recommendations.”
The government has already offered two relief packages to exporters, in July and in October. The July package, which cost the exchequer about Rs 1,400 crore, included accelerated reimbursement of TED and CST dues to exporters, interest subvention of 2%, upward revision of duty drawback and duty entitlement passbook scheme rates and service tax refund in respect of port services, transport of goods, transport by railways and other port services.
The second package included service tax refund or exemption for three services –– general insurance, technical testing & analysis, and technical inspection & certification. It provided for payment of interest on Exchange Earners’ Foreign Currency accounts of exporters on outstanding balances subject to a maximum of $1 million.
The Centre also added four more sectors — jute and carpets, cashew, coffee and tea, solvent extraction and deoiled cake, and plastics and linolen — to the list of export sectors eligible for interest subvention under pre-shipment and post-shipment credit. The coverage under Vishesh Krishi and Gram Udyog Yojana, a scheme to promote export of farm and village industry products, was expanded and the Budget allocation was doubled to Rs 600 crore.
Source: Industry Website
