By IANS
New Delhi : With India’s exporting community in distress because of the rising rupee, Finance Minister P. Chidambaram Wednesday urged all state governments to ensure that their taxes do not burden external trade.
“Exports are under some stress due to rapid appreciation of the rupee against a weak dollar,” Chidambaram told the a meeting of the National Development Council (NDC) here to approve the 11th Five Year Plan.
“At present, number of taxes including value-added tax, octroi and electricity duty are borne by exporters. They should be rebated or refunded. I would urge state governments to look into this issue carefully,” he said.
The finance minister’s request comes in the wake of serious concerns over a dip in India’s merchandise exports as the result of a double-digit appreciation in the value of the Indian currency vis-à-vis the US dollar.
Chidambaram said in recent months the central government has announced several relief packages with the hope that they would bring some measure of relief to the country’s exporters.
“However, regardless of the exchange rate or any other external circumstance, it is an universally accepted principle that taxes shall not be exported,” he said, referring to the policies adopted in other countries.
“The central government rebates or refunds every tax that is payable or paid and is attributable to goods and services that are exported. I submit that the state governments should do the same,” he said.
“Any state which relieves exporters of tax burdens stands to gain – more export-oriented industries will locate in that state. Hence, it is in the long-term interest of the state to rebate or refund all taxes on exports.”
Besides Prime Minister Manmohan Singh, chief ministers and lieutenant governors of states, some key ministers of the union cabinet and Planning Commission Deputy Chairman Montek Singh Ahluwalia attended the NDC meeting.