FIEO says supportive tax regime vital for reaching export target

New Delhi, Feb 23 (UNI) Ahead of the budgetary proposals, the Federation of Indian Export Organisations (FIEO) today called for a "supportive tax regime" to sustain India's export growth tempo which has been growing at an average of 24 per cent in the past three years and to capture a global market share of two per cent by 2010.

A ''supportive tax regime'' was vital for exports in view of limited infrastructure facilities available and inherently high transaction costs to retain the country's competitive edge in the international market, FIEO President Ganesh Kumar Gupta said in a statement here, He also sought a viable alternative to Sec 80-HHC of the Income-Tax Act on the lines of the earlier Sec 35 B that allowed exporting companies a weighted deduction of 133 per cent for its marketing expenses.

In this context, Mr Gupta suggested that the weighted deduction could be enhanced to 150 per cent. Alternatively, ploughing of export profits into an 'export profit reserve' for expansion/upgradation of plant and machinery/R&D could also be considered.

To reduce the transaction costs, service tax and fringe benefit tax may be waived for the export sector, the FIEO President said, adding that an abatement of 75 per cent had been granted to Goods Transport Services (GTA) but more clarity was required defining for whom exactly the abatement was available to and what it included.

He appealed to the Government to consider a higher level of abatement, and make GTA service non-Cenvatable reducing paperwork/transaction cost. While export cargo had been exempted from levy of service tax, other services such as port services/stevedoring services among others in relation to exports were not exempt.

Mr Gupta further said that in the case of foreign agency commission being subject to service tax, the Finance Act appeared to have gone beyond the territorial jurisdiction it signified, and, therefore, suitable amendments needed to be made accordingly.

UNI