Commodity cess to go

FOREIGN TRADE POLICY/ CESS

The cess on exports for 2004-05 was put at Rs 165 crore, estimated to go up to Rs 208 crore in 2005-06 on account of incremental exports

In a move aimed at reducing the burden of indirect taxes on exporters, the government today announced abolition of cess levied under different Commodity Board Acts on exports of all agricultural and plantation commodities.

"Cess levied under different Commodity Board Acts is a tax on exports. This is a handicap and a major irritant to our exporters, since it erodes the competitiveness of our agricultural exports," said Commerce and Industry Minister Kamal Nath while announcing the Foreign Trade Policy today.

The cess on exports for 2004-05 was put at Rs 165 crore, estimated to go up to Rs 208 crore (Budget estimates) in 2005-06 on account of incremental exports.

The decision to remove cess will also require legislative changes in certain cases. The commerce ministry proposes to take up the issue with other ministries before going to the Cabinet.

Taxes and duties should not be exported, Nath said, adding that ministries would be consulted in order to identify all the cess levied on exports and to take steps to eliminate them.

At present, different commodity boards -- the Coffee Board, Tea Board, Tobacco Board, Rubber board, Spices board and the Agricultural Produce Export Development Authority (APEDA) -- levy cess ranging from 1 per cent to 4 per cent on exports. The cumulative effect of abolishing these will be to reduce revenues by around Rs 100 crore, said officials.

The APEDA cess, at the rate of 0.5 per cent ad valorem, the Agricultural Produce Cess at 0.5 per cent of tariff value, and the cess of 0.5 per net of FoB value on agriculture items like spices, tobacco, fruits and nuts, among others is, expected to go.

The commodity boards are under the administrative control of the commerce and industry ministry, and therefore have been identified first. The effort will be to ensure that exporters do not lose out on account of such indirect taxes in any area, said commerce ministry officials.