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    New scheme for service exports with max sops for MSMEs proposed

    Synopsis

    The scheme is touted as a replacement for the Service Export from India Scheme and is on the same lines as Remission of Duties and Taxes on Exported Products (RoDTEP) for goods exports.

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    Aimed at refunding taxes already paid back to services exporters, DRESS is proposed to include all service exports created in India and exported from the country in modes 1 and 2 of service delivery.
    NEW DELHI: Ahead of the new foreign trade policy, industy has proposed a new incentive scheme for services exports that would give higher benefits to exporters in the MSME sector.

    The Services Export Promotion Council has suggested the government to consider a Duty Remission on Export of Services Scheme (DRESS) to refund taxes to services exporters wherein small and micro exporters would be eligible for a 7% incentive while the large ones would get 4%. The scheme is touted as a replacement for the Service Export from India Scheme and is on the same lines as Remission of Duties and Taxes on Exported Products (RoDTEP) for goods exports.

    “We have received a proposal from the council. We are studying it,” said a senior official in the know of the development.

    Aimed at refunding taxes already paid back to services exporters, DRESS is proposed to include all service exports created in India and exported from the country in modes 1 and 2 of service delivery. Mode 1 refers to cross border trade and Mode 2 means consumption abroad. The scheme proposes remission rates of 7%, 5% and 4% for micro and small, medium and large enterprises.

    These taxes include those on employee related expenses such as cab services, construction services or fuel where GST credits are prohibited, excise duty and VAT on petroleum products, electricity taxes and stamp duties.

    “The extent of unrefunded taxes in the export chain are in the range of 5-9% of the exports value and it is proposed that these taxes be reimbursed to make the service exports competitive,” said Maneck Davar, chairman, SEPC.
    33Agencies
    The incentive scheme is proposed when the services sector is hit the hardest by Covid-19 pandemic and seeks to replace the SEIS that offers incentives of 5-7% of net foreign exchange earned.

    “It is our estimate that just this rebate or reimbursement of embedded taxes will result in over $50 billion increase in our service exports,” the council said in in the proposal to the commerce and industry ministry.

    The commerce and industry ministry is drawing up the FTP 2021-26, which is likely to be released on April 1 and offer incentives for the country’s goods and services sector that would create employment and enhance exports.

    India exports over $200 billion of services annually, which contribute to almost 7% of the gross domestic product.


    ( Originally published on Feb 22, 2021 )
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    1 Comment on this Story

    Kishore Shivani5 days ago
    CHECK THE PERSONAL ASSETS OF THESE MSMES THEY ARE ALL MILLIONAIRES THEY WANT TO LOOT THE NATION GOVT AND TAXPAYERS MONEY THEY SPENT CRORES ON BUYING PROPERTY AND ANOTHER CRORE ON INTERIORS BUT HAVE NO MONEY TO RUN THEIR BUSINESS BUNCH OF CROOKS CHEATS ROGUES MORONS.
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