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After months of waiting and discussions, the word is out — the Finance Ministry has at last decided to refund service tax paid by exporters on four taxable services rendered by ports, road transport, and railways. The move comes at a time when exporters are reeling under the burden of appreciation of the rupee against the US dollar.
But the big question here is: 'Is this refund enough for the exporters?' I would say no!
Firstly, key services which include commission to foreign agents, professional fee, foreign travelling expenses, bank charges on loans, courier services and participation in trade fairs have not been included in the notification.
Secondly, it was surprising that the notification is far from what was promised on zero tax rate on exports in the Foreign Trade Policy. Refund of input tax on non-excisable, non-cenvatable sectors have been left out of the purview of this exemption.
Thirdly, I get a feeling that this recent notification will only add to the woes of exporters as the service tax would be refunded and not zero-rated or exempted. This would only mean that now exporters will have added paperwork to work upon.
Fourthly, the notification should be made applicable from the date on which such services were brought under the service tax net.
I get a feeling that the refund notification is a cover-up job on the part of the Finance Ministry which wants to skirt the issue totally. So on one hand the authorities have given some relief to the exporters, while on the other, they've added obstacles on the already rocky path of the exporters seeking refunds. Great going Mr Finance Minister!
It has always been the mindset of all Indian governments (irrespective of the colour and philosophy) to think and work in a round about way.
That is their mindset. Anything that is simple is not the right thing and cannot be the right thing. Maybe the babus who occupy the corridors of power feel left out if things are simple. If people don't come to them for some pretext or the other.
Earlier on I had great confidence and hope on the present finance minister. I only find that he is a typical neta. Likes to make life miserable for everyone, in a sophisticated way though.
Every person on the street, every trader, every manufacturer I talk to talks of the headache that our taxation system is.
Every top official and politicians talk of making things simple. Every time an effort is made to make things simple it ends up creating more confusion and misery for everyone.
Take for example the VAT system. They said the tax will be levied only on the portion of the value added. But every time I buy something from the market I am taxed for the whole amount and then which Indian businessman will openly say what the difference is between the procured price and his selling price is. They said that the prices of commodities will come down once the VAT is implemented. I have no such experience. I don't know if someone shares a different experience.
In my childhood a wise elder told me once "Keep it simple you dummy". Now I don't know who will tell our living gods in the corridors of power about the art of keeping things simple.
Free Member, Joined :10/14/2006
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