The new tax refund scheme is aimed at reviving the export market of India, in particular. The need for a scheme was necessitated after a sudden downturn in exports for India; a fall of more than 6%. Sector lending will increase to incentivize the private sector.
Fri Jul 22 2022 | Govt. Agencies and Taxation | Comments (0)
In a stride towards stabilizing and boosting the economy, the Finance Minister Nirmala Sitharaman introduced a new strategy to refund duties and taxes on exports, simple export credit and extra funding for exporters under the revised priority sector lending standards.
The above plan has been initiated after India’s economic growth plunged to a 25-quarter low of 5% in April-June, 2019. Further, India’s exports m declined in August after global trade agitations and lethargic demand caused shipments down by 6.05%.
The introduced Remission of Duties or Taxes on Export Product (RoDTEP) plan was applicable from 01.01.2020 which will motivate exporters at an evaluated cost of Rs. 50,000/- crore and substitute the Merchandise Exports from India Scheme (MEIS), the same was disputed by the USA in 2018 for abusing global trade rules.
The Finance Minister stated that RoDTEP will satisfyingly motivate exporters than all the current schemes combined
Moreover, the Director General of Foreign Trade, Alok Chaturvedi, explained that the latest scheme will be taken to the cabinet soon and the fares will be figured out sector by sector.
The Finance Minister further added that there will be a completely automated electronic refund route for input tax credits in GST for swifter refunds.
Besides this, the Finance Minister further declared modified priority sector lending (PSLNSE 0.00%) measures for exporters which will provide an extra funding of Rs. 36,000 to Rs. 68,000 crore to them. Also, export finance will be regularly supervised by an inter-ministerial group of people which will be a part of the Department of Commerce.
This current plan is the latest programme of norms after the government declared mergers of Public Sector Banks, initiated Foreign Direct Investment in contract manufacturing and simplified norms for overseas investors in single-brand retail and coal mining.
Apart from this, the Director General of CII Chandrajit Banerjee, said that the latest measures will be significant since urgent measures were the need of the hour to reinforce exports, which had been plunging for a couple of months and therefore, the new plan to reimburse exporters for all duties is going to help significantly.
Additionally, the Export Credit Guarantee Corporation (ECGC) will multiply the extent of Export Credit Insurance Scheme at a value of Rs. 1,700 crore per annum to allow lowering the total cost of export credit, substantially to MSMEs.
The Finance Minister even proclaimed that a Free Trade Agreement Utilisation Mission (FTAUM) will be established to assist exporters ideally utilize the discounted taxes under the trade pacts that India has agreed upon with numerous nations, which will introduce and organise annual mega shopping festivals similar to the Dubai Shopping Festival to focus on yoga, handicraft, textiles, tourism as well as leather.
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