Interviews
Apparel exporters in dilemma over service tax
28 Jun '05
1 min read
Apparel exporters fear a loss amounting to approximately Rs.500 crore per year due to the imposition of service tax on export cargo freight rates.
The government by way of notification no 28/2005 has withdrawn the exemption enjoyed by the air cargo operators from June 16, 2005. As a result, an additional burden of 10.2 percent service tax will be levied on export cargo freight rates.
Further the notification adds, that the tax collected for services rendered will have to be in Indian rupees.
Confederation of Indian Apparel Exporters (CIAE) president Amit Goyal explained, “The apparel exporters ship their goods on CIF basis which means that exporters collect the freight amount from the customer in foreign currency and make the payment to the airlines in India in rupees, but this is foreign inward remittance so why should the service tax come under it. This is totally illogical.”
Visibly upset by this notification, the export community facing stiff competition from China in the new quota free world, fear negative government policies will force export units to close down as they are already working on narrow margins.
The government by way of notification no 28/2005 has withdrawn the exemption enjoyed by the air cargo operators from June 16, 2005. As a result, an additional burden of 10.2 percent service tax will be levied on export cargo freight rates.
Further the notification adds, that the tax collected for services rendered will have to be in Indian rupees.
Confederation of Indian Apparel Exporters (CIAE) president Amit Goyal explained, “The apparel exporters ship their goods on CIF basis which means that exporters collect the freight amount from the customer in foreign currency and make the payment to the airlines in India in rupees, but this is foreign inward remittance so why should the service tax come under it. This is totally illogical.”
Visibly upset by this notification, the export community facing stiff competition from China in the new quota free world, fear negative government policies will force export units to close down as they are already working on narrow margins.
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