GEA urges Government to exempt exporters from Service Tax

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New Delhi, Oct 10 (UNI) The garment exporters association (GEA) today urged the Government to exempt exporters from the payment of Service Tax on all export-related services and save them from unnecessary paper work and procedural delays in availing the benefit.

''The Government's policy has been not to export taxes and duties but only goods and services. Charging Service Tax on exports leads to export of taxes which should be exempted in full. It should, therefore, provide complete exemption to exporters from payment of Service Tax on all services, including banking charges, couriers services, commission to foreign agents, foreign traveling expenses and participating in overseas trade fairs, charges to CHA's and advertising service charges,'' said Mr G S Madan, President, GEA.

The Commerce Ministry has been advocating neutralising the entire Service Tax paid by exporters, he added.

The garment exporters are disappointed by Finance Ministry's Notification of October 6, 2007 providing refund of Service Tax paid by exporters on services provided by an Insurer, Technical Testing and Analysis Agency, Inspection and Certification Agency.

The Notification of September 17 had earlier provided refund of Service Tax paid by exporters on Port Services provided for export, services of transport of export goods by road from ICD to port of export by Goods Transport Agency and services of transport of export goods in containers by rail from ICD to port of export, Mr Madan said.

However, the refund has not been provided on a number of other important services on which Service Tax is being paid by exporters, but they are still outside the preview of the Notifications, only limited relief to the exporters, he said.

The relief is limited to few services and, therefore, very much short of our expectations as well as recommendations earlier announced by the Commerce Ministry, Mr Madan said adding that it also does not neutralise the adverse impact of sharp appreciation in the value of rupee of over 11 per cent which has seriously eroded the profitability of exporters.

GEA President recommended that the Service Tax should be factored into the drawback claims made by exporters and the drawback rates should be increased by five per cent.

This would eliminate unnecessary paper work and enable the exporters to concentrate on using their energies to compete with the neighbouring countries like China, Pakistan, Bangladesh who have not been affected by appreciation of their currencies and hence are eating into our orders from foreign buyers with a cascading effect of reducing employment in the factories, Mr Madan suggested.


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