EXEMPT EXPORTS FROM VAT: CAPEXIL
CAPEXIL AGM AND EXPORT AWARDS FUNCTION HELD
Date : 26 Nov 2004
Location : New Delhi
Exports should be exempted from the value-added tax (VAT), CAPEXIL (formerly Chemicals & Allied Products Export Promotion Council) Chairman, Shri A. M. S. G. Ashokan urged the government in his speech at the CAPEXIL’s Export Awards Distribution Function and the 46th Annual General Meeting here last evening. "The Value Added Tax in its present form does not appear to have provisions for exporting the good without the payment of VAT. The futile procedure of having to pay first and seek yearly refund later results in blockage of funds and high transaction costs, and is also a meaningless exercise for the State Governments as the transaction will not fetch any revenue ultimately. As such, exports should be exempted from VAT", he said. Shri E.V.K.S. Elangovan, Minister of State for Commerce & Industry, gave away the awards, and said that CAPEXIL had emerged as one of the premier export promotion bodies in India catalysing exports of chemical based and allied products.
CAPEXIL has under its coverage a sizeable segment of 7.5% of India’s total exports, amounting to export of US $ 4.85 billion spread over 16 diverse product-groups and shared by its 4000 members spread across the country. Shri Elangovan said that the role of the government was that of an enabler to provide reformed trade policy that could nurture a sustainable export growth. He said a slew of benefits had been announced in the new Foreign Trade Policy and export procedures were being simplified to bring down the transaction cost for exporters.
CAPEXIL has also requested the government to take urgent steps to refund through the mechanism of Duty Drawback the numerous state/local taxes such as sales tax, octroi, fuel surcharge, service tax etc. that the Indian trade and industry had to pay unlike their foreign counterparts, impacting on their export operation and production. He also urged the government to address the issue of inordinate delays in export through the JNPT port in order to avoid giving India a bad name.
In another significant observation, the CAPEXIL Chairman said "present duty exemption schemes such as advance license, DEPB etc., are WTO-compatible and therefore, we are under no obligation to withdraw such schemes. To allay fears of the export trade, the government should come forward with a positive statement in the matter. Steps should also be taken to make these schemes more dynamic and flexible by incorporating suitable changes".