Tax refund schemes may see sharp hike in outlay
The government will likely raise allocation under two crucial tax remission schemes for exporters —RoDTEP and RoSCTL — to as much as Rs 22,000-27,000 crore in the Budget for the next fiscal from about Rs 19,400 crore in FY22, a senior official told FE.
“Given the sharp rebound in exports, there is a need to raise the outlay for these schemes substantially to ensure all exporters continue to get tax remission and our outbound shipments remain truly zero-rated, in sync with the best global practices. Since the export target is going to be much bigger in FY23, the fund requirement will also rise accordingly,” he said.
Sustained and adequate remission of taxes, in addition to structural reforms, will improve exporters’ competitiveness and better equip them to cash in on the current resurgence of industrial demand in advanced economies, even as the new Covid strain threatens their ability to honour supply commitments on time. It also remains critical to India’s efforts to scale up goods exports to the targeted $1 trillion by FY28 from $291 billion in FY21.
Under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, the refund rates have been set in the range of 0.3% to 4.3% of the freight-on-board (FoB) value of the exported products. Similarly, under the Rebate of State and Central Taxes and Levies (RoSCTL) scheme, garment exporters get scrips of up to about 6% and the made-up sector up to 8.2%. Exporters’ body FIEO has forecast that outbound shipments could rise to a fresh peak of $460-475 billion in FY23.
Merchandise exports surged to $300 billion until December, a record for the first three quarters of any fiscal, and are poised to hit the lofty target of $400 billion for the current fiscal. Only a sustained growth momentum for the next few years will help the country recapture its lost export market share. Exports had remained below par in the past decade, having fluctuated between $250 billion and $330 billion a year since FY11, before the surge in the current fiscal.
The government has allocated Rs 12,454 crore for the RoDTEP scheme and Rs 6,946 crore for the RoSCTL programme for garment and made-up exporters.
Earlier this fiscal, the government pledged to release Rs 56,027 crore to clear all the pending dues owed to exporters until FY21 under various schemes. This amount, over and above the allocation for the RoDTEP and RoSCTL schemes, was aimed at substantially improving the liquidity of Covid-hit exporters. The announcement came as a relief for exporters, who have also been hurt by a spurt in global shipping costs (over 200% jump since August 2020).
Check the source here –Source, Financial Express.