Tax scheme for 1,100 export items withdrawn

During the global financial crisis of 2008-09,the DEPB rates were revised upward as a stimulus. With the average rate of 8 per cent,the DEPB was the most preferred route among exporters.

The reduction is mainly due to reduction in basic customs duty on crude petroleum from 5 per cent to nil and reduction in central excise duty on diesel from Rs 4.40 per litre to Rs 2.40 per litre, a government statement said.

Of the 1,100 items being shifted to DDS,there would be a ceiling of 5.5 per cent tax refund rate on 660 items. However,the ceiling would not apply to 340 items.

Further,the duty drawback rates for these 1,100 items have been computed in line with the existing customs rate.

Wherever the duty drawback rates are up to 3 per cent there will be no value caps, Gujral said.

In fact,the auto sector has been completely exempted from value caps. The duty drawback rate for passenger cars is set to remain at 3 per cent and,in case company feels that there is a high incidence of tax,they can approach the government,Gujral added.

For other automobile sector items the rate will be the same as that under the DEPB scheme,minus the ad hoc rates that were added.

The total goods available under the Duty Drawback Scheme (DDS) will now increase to about 4,000 from 2,835. The government had spent Rs 8,700 crore last year on DEPB refunds and engineering,chemical,pharma,textile and marine products have been the major beneficiaries.

If the scheme would have continued the revenue foregone by the government would have been Rs 10,000 crore,S D Majumdar,chairman,CBEC said. The exact saving of the government on account of shifting these items to DDS will be worked only after a clear trend on direction of exports is available by the year-end.