New Delhi, Dec. 20: Commerce minister Kamal Nath today proposed two options on the refund of export levies by states.
One is states refunding taxes directly; the other is a refund by the Centre which then adjusts the sums against its allocations to states.
After three relief packages in six months, the Centre now wants states to bear part of the burden of the rising rupee on exporters.
Speaking on the sidelines of an industry event, Nath said regardless of the exchange rate or any other external circumstance, it is a universally accepted principle that taxes shall not be exported.
If a state refunds taxes, it will gain because exporters will set up units in the state.
Hence, it is in the long-term interest of states to rebate or refund all taxes on exports, Nath said.
A cabinet note has been prepared by the commerce ministry on the Centre refunding state taxes.
However, the finance ministry has opposed the proposal as states may hike taxes and claim more refunds from the Centre. Finance minister P. Chidambaram yesterday said the Centre had given Rs 5,200 crore of sops to exporters and now states should, too, offer reliefs.