As the one nation, one tax regime gathers steam, and Goods & Services tax runs from July 1, the government has started a review of the Foreign Trade policy, which may witness a trimming of export incentives that are currently underway, reported a leading business daily.
The directorate general of Foreign Trade under the Commerce Ministry has been meeting legal and tax consultancy entities on the issue, especially on scrip based incentives such as the Services Exports from India Scheme; & Merchandise Exports from India Scheme (MEIS), revealed the report.
The news report said, the Ministry or its agencies issue a scrip to an exporter, to be facilitated for payment of central taxes such as customs duty or excise duty and service tax on the future procurement of goods and services. Such modes of payment would not be allowed after the GST regime begins.
L Badri Narayan, Taxation partner at Lakshmikumaran & Sridharan informed the business daily- significant changes in these schemes are not expected, owing to their scale and lack of alternative ones.
“MEIS benefits are also given to exporters for the processing part, i.e. any loss incurred due to inefficiencies in the government processing part of the export. On that note, any major changes to the scheme will affect exporters significantly” – quoted the daily.
Meanwhile, the mid-year review of the FTP was scheduled in the month of September, and the introduction of GST has given rise to a debate over whether it should be advanced. The five-year policy (2015-2020) provides a framework for aiding export or goods & services besides creation of employment and increasing of value addition.
It sets a target of export of goods and services to $900 billion by 2020; the figure in 2016-17 was $275 billion.
Source: Indiainfoline.com