FIEO suggests double tax deduction scheme, export development fund to FM
New Delhi: Exporters’ body FIEO on Saturday suggested a host of steps such as bringing double tax deduction scheme and setting up of a export development fund to the finance ministry with a view to boosting outbound shipments.
The other recommendations include extending tax deduction on product development, providing deemed export status to Indian industry under the global bidding of procurement, ECGC coverage to the Banks for export finance, and higher budget allocation to the Department of Commerce.
Federation of Indian Export Organisations (FIEO) President Sharad Kumar Saraf suggested these steps during the pre-Budget consultation meeting with Finance Minister Nirmala Sitharaman. He recommended introducing a “Double Tax Deduction Scheme” which can allow exporters to deduct against their taxable income.
“A ceiling of USD 5,00,000 may be put under the scheme so that the investment and tax deduction are limited,” he said in a statement.
He added that the marketing support under the Market Access Initiative of the Ministry of Commerce is “very” small and there is a need to create an Export Development Fund with a corpus of 0.5 per cent of the country’s exports for helping the MSME.
He also said that Indian companies winning contracts under global tender may be accorded deemed exports status, since they substitute direct import which would have taken place if the contract had been won by a foreign supplier.
“Deemed export status would enhance the competitiveness of Indian industry vis-à-vis foreign suppliers as the former would enjoy certain tax-related benefits,” Saraf said.
The government may consider introducing a scheme in line with Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 to resolve all disputes relating to customs and DGFT (Directorate General of Foreign Trade).
“There are a large number of cases of exporters pending settlement with customs and DGFT… The waiver of interest and penalty and may be the duty liability will help the industries which are passing through a rough patch due to lack of demand both domestically and globally,” he said.