New Delhi, Jan. 5
WITH less than two months to go before the Budget proposals for 2005-06 are unveiled, the Federation of Indian Export Organisations (FIEO) has decided to make a case for restoration of full tax exemption on export profits.
"We will appeal to the Finance Minister, Mr P. Chidambaram, that tax exemption on export profits should be restored. If the Government is keen on creating employment for 10 million people, then they should incentivise investment in export-oriented industries," the newly elected President of FIEO, Mr O.P. Garg, told Business Line here.
The FIEO President is to meet Mr Chidambram on January 11. Indications are that Mr Garg may press for the restoration of tax exemption on export profits at this meeting.
Mr Garg is also expected to discuss exporters' concerns over the proposed value added tax (VAT) regime.
"Exporters have been told that they would be out of VAT. Exemptions are useful only when they are given at the time of payment. Any regime that requires us to first pay the VAT and then claim refund on exports is not acceptable to us," he said.
Mr Garg said that FIEO could promise creation of at least 5 million jobs in the first year if the tax exemption on profits were to be restored in the Budget.
The Income-Tax law currently provides that all export profits made from the financial year 2005-06 would be taxable and no tax exemption would be available.