New scheme for service exports with max sops for MSMEs proposed – The Economic Times

Clipped from: https://economictimes.indiatimes.com/small-biz/sme-sector/new-scheme-for-service-exports-with-max-sops-for-msmes-proposed/articleshow/81149883.cmsSynopsis

The scheme is touted as a replacement for the Service Export from India Scheme and is on the same lines as Remission of Duties and Taxes on Exported Products (RoDTEP) for goods exports.

NEW DELHI: Ahead of the new foreign trade policy, industry has proposed a new incentive scheme for services exports that would give higher benefits to exporters in the MSME sector.

The Services Export Promotion Council has suggested the government to consider a Duty Remission on Export of Services Scheme (DRESS) to refund taxes to services exporters wherein small and micro exporters would be eligible for a 7% incentive while the large ones would get 4%.

The scheme is touted as a replacement for the Service Export from India Scheme and is on the same lines as Remission of Duties and Taxes on Exported Products (RoDTEP) for goods exports.

“We have received a proposal from the council. We are studying it,” said a senior official in the know of the development.

Aimed at refunding taxes already paid back to services exporters, DRESS is proposed to include all service exports created in India and exported from the country in modes 1 and 2 of service delivery. Mode 1 refers to cross border trade and Mode 2 means consumption abroad. The scheme proposes remission rates of 7%, 5% and 4% for micro and small, medium and large enterprises.

These taxes include those on employee related expenses such as cab services, construction services or fuel where GST credits are prohibited, excise duty and VAT on petroleum products, electricity taxes and stamp duties.

“The extent of unrefunded taxes in the export chain are in the range of 5-9% of the exports value and it is proposed that these taxes be reimbursed to make the service exports competitive,” said Maneck Davar, chairman, SEPC.

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