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Expect hike in income tax threshold limits in Budget 2017: FIEO CEO

With the Union Budget coming up in few days, Federation of Indian Export Organisations (FIEO) DG and CEO, Ajay Sahai, said that he is expecting a general increase in threshold limit for income tax payers in the country.

Putting forth his views, Sahai told ANI that the budget should align indirect tax rates (other than custom duties) towards the standard rate of 12% and 18% in view of the recent developments on the GST front.?Service tax and Excise duties may move in this direction for smooth transition to the GST,? he added.

In terms of the export sector, Sahai believes that interest equalization scheme, which currently covers the MSME manufacturing units and certain labour intensive sectors, should also cover merchant exporters since they play a pivotal role in export sector’s expansion.

“The merchant exporters contribute to over 40% of the country’s exports. These exporters are presently exempted from VAT/ CST while taking goods for exports. However, such exporters will be subject to IGST which will block their capital and thus reduce their competitiveness,” said Sahai.

“The government should allow exemption from IGST to merchant exporters against a running bond which may be debited while taking supply and credited when proof of exports is provided,” he added.

Sahai further said a more aggressive export marketing strategy needs to be introduced for which the government must establish an export development fund with a corpus of 0.5% of the export value, adding this will encourage small and medium enterprises to easily enter the market and sell their products. “Technological changes also need to be made to increase export value,” he said.

Sahai further said the Credit Linked Capital Subsidy Scheme (CLCSS) has helped the small scale sector to modernize and expand their production.

“The CLCSS limit was fixed at Rs 1 crore in 2006 and therefore, the limit under CLCSS should be increased from Rs 1 crore to Rs 5 crore,” Sahai added.

The DG and CEO of FIEO also lauded the government’s demonetization drive, saying this will surely change the perspective of the Indian economy.

“The addition of GST will also ensure that all transactions are monitored and accounted for. Although the export sector was not deeply affected by this move,” said Sahai, adding certain labour-intensive sectors did go through a very rough patch in November and December and, therefore, the withdrawal limit must be increased.

“Payment of wages to workers is a challenge. Many of them coming from distant areas may not have bank account at their place of works Those taking small quantities like fruit vegetables from farmers or handicraft from artisans or sending goods for job work are also reporting the same problem,” said Sahai.

“The transportation of raw material and finished goods has also been delayed .The withdrawal limit may be increased to one% per month of previous year turnover from Rs. 50,000 per week. The said limit can easily be operated by the banks as they have access to the balance sheet and turnover details of each firm/company,” he added.