The Federation of Indian Export Organisations (FIEO) yesterday demanded the rationalisation of minimum alternative tax (MAT), reduction of customs duty on fibers, reasonable duty on metallic embellishments and abolition of some central excise rules.
The Federation of Indian Export Organisations , in its pre-budget memorandum, said there was no mechanism to compensate exporters for the cost of inputs, consumables and services and the tax exemption of export profit that had now been brought under minimum alternative tax.
The memorandum said that even if minimum alternative tax was considered a necessity, the payment under it should be considered as an advance payment of tax and should be allowed for adjustment against taxes payable in future assessment years on taxable income above the minimum 30 per cent.
The exporting community was most concerned with the introduction of Section 115JA in the Income Tax Act which would have a dampening effect on export growth by diluting the benefit of Section 80HHC up to the 30 per cent of the book profit, the paper said.
Though proprietorship and partnership firms will not be affected by the provision, about 20,000 exporters will lose their competitive edge in the international market, giving an advantage to their counterparts.
The memorandum said the export target of $75 billion by the turn of the century, set by the government, was not an ambitious target and with proper government backing and appropriate infrastructural support, achievement of a figure of $100 billion might be possible.
The Federation of Indian Export Organisations has demanded reduction of customs duty on yarn of man-made synthetic and artificial staple fibers to 30 per cent on par with filament yarn.
It also said in the memorandum that the customs tariff for photocopiers should be reduced to the new tariffs now applicable for personal computers, which was 40.3 per cent for imports of finished goods and 28.8 per cent for importing components required for local manufacturing.
The memorandum said to encourage indigenous manufacturers of critical life saving drug intravenous fluids, the effective rate of customs duty should be reduced to 10 per cent from existing 65 per cent.
The paper said at present duty of all metallic embellishments was payable at the rate of 22 per cent as basic and additional customs duty.
The customs duty on embellishment, being an integral part of leather goods and imported in bulk, should have a reasonable duty of about 10 per cent in order to enhance export of leather goods, it added.
In addition to existing provisions and procedures, the fabric and embellishments for development of samples of ready-made garments may also be allowed to be imported duty free, without any export obligation of the value equivalent to two per cent of the freight on board value of exports, FIEO said.
The pre-budget memorandum of Federation of Indian Export Organisations said the banking sector in the country continued to play a