Service tax on all exports scrapped
Measure will help country achieve target of $160 billion in exports in 2007-08.
New Delhi: Scrapping service tax on all exports and duty sops for special economic zones (SEZs) are two important reforms the government announced on Thursday in a foreign trade policy document.
The Annual Supplement to Foreign Trade Policy 2004-09 sets a target of $160 billion for merchandise exports during 2007-08, said Commerce and Industry Minister Kamal Nath.
An export target of $125 billion for 2006-07 has been met. He said ambitious goals of achieving $160 billion in 2007-08 and $200 billion in 2008-09 have been set.
"We have factored in the appreciation of rupee which keeps on fluctuating. We have already requested Reserve Bank of India to provide confessional loans to exporters," he said.
Nath said the government would meet leading export promotion organisations next week to devise a strategy to deal with the rupee appreciation.
The slowdown of the US economy has also been taken into account, he said, adding it would not have a major impact on exports as country's trade basket was quite wide.
Nath announced extending the popular Duty Entitlement Passbook (DEPB) scheme till March 2008. He said a new scheme to replace the existing one would be finalised by then.
The annual policy review met some long-pending demands such as exempting all exports, including those of services, from the service tax. Modalities of refund would be worked out by Commerce Ministry in consultation with Revenue Department.
Besides, more items have been included in 'Vishesh Krishi and Gram Udyog Yojana' for tax sops. The benefit will also be available to exporters of coconut oil, soyabean oil, potato
flakes, meals and flours, cardamom and food preparations like soups, pasta, sauces and bakery products.