Mumbai: The government
has announced further relief measures for exporters hit by a rising rupee and
increased the number of sectors eligible for lower bank lending rates.
finance ministry notification issued today said the government has broadened the
list for exemption of service tax to three additional taxable services:
General insurance services provided to an exporter in relation to insurance of
testing and analysis agency services in relation to technical testing and analysis
of export goods; and
Inspection and certification agency services in relation to inspection and certification
of export goods.
service tax paid by exporters on these three additional taxable services are not
in the nature of "input services" but could be linked to export of goods,
the notification said.
tax paid by exporters on input services used for export goods is neutralised under
various existing schemes. The issue of providing refund of service tax paid on
taxable services, which are not "input services" but could be attributable
to export of goods was examined in consultation with the stakeholders.
was decided to refund service tax paid on taxable services which could be linked
to exports even if they are not in the nature of input services, the notification
has added industries like jute and carpets, processed cashew, coffee and tea,
solvent extracted de-oiled cake, plastics and linoleum to the list of sectors
eligible for lower lending rates from banks.
government also announced payment of interest on the Exchange Earners Foreign
Currency accounts for exporters. The interest rates would, however, be determined
by individual banks.
RBI has raised interest rates and bank reserves sharply in the few months to help
curb inflation and credit growth. Exporters say the monetary tightening has increased
the cost of export credit by 2.5 to 3 percentage points.
government had last month issued a notification providing refund of service tax
paid on port services provided for export, other port services provide for export,
services of transport of goods by road from ICD to port of export provided by
goods transport agency and services of transport of export goods in containers
by rail from ICD to port of export.
has set a target of $160 billion in exports in fiscal 2008 and analysts say the
surge in the value of the rupee would moderate export growth in the months ahead.
rupee hit 39.36 per dollar, its strongest since March 1998, gaining one per cent
this week alone.
is up more than 2.5 per cent since the US Federal Reserve cut rates last month
and has risen 12 per cent in 2007.
surge has triggered complaints from small and medium-sized exporters, who account
for nearly 45 per cent of the country''s exports.
government has been monitoring the situation arising out of the appreciation of
the rupee," the statement said.
appreciation of the rupee is a reflection, in part, of the growing strength of
the economy and has positive economic benefits by way of cheaper imports,"