The government is expected to extend the tax relief for exporters under the Duty Entitlement Passbook (DEPB) scheme for another three months, from its 30 June deadline, reports quoting commerce and industry minister Anand Sharma said today.
He said the finance ministry has given a three-month extension to the popular export incentive scheme that extends tax breaks to exporters.
Reports said this is a transitional arrangement and that exporters should be prepared to switchover to a duty drawback scheme when the DEPB extension ends.
The decision to extend DEPB was taken at a meeting early this week between finance minister Pranab Mukherjee and commerce and industry minister Anand Sharma.
For the finance ministry, continuing with the DEPB scheme amounts to a double blow as it neutralises import duty on inputs that go into the imports and also entitles exporters to duty-free scrips, or entitlements, which they can use to pay import duties.
The scrips are provided on the assumption that all inputs are imported. However, they are allowed to use up to 50 per cent domestic inputs under the scheme. The scrips can also be traded freely.
The scheme cost the exchequer Rs8,520 crore in 2010-11 and more than 60 per cent of the benefits have gone to large engineering and chemical exporters.