Exporters likely to be exempted from tax at source
The intent is not to tax overseas buyers of Indian goods, said a government official.
Tax experts said the provision means that export of goods could attract this levy, and since overseas buyers of Indian goods would not have PAN or Aadhaar, the tax rate would be 1%.
New Delhi: The government will soon clarify that the $300-billion exports sector would not be covered by the proposal for 1% tax collected at source (TCS), introduced by the budget. Officials told ET that the budget has an enabling provision to provide exclusions.
"The intent is not to tax overseas buyers of Indian goods. Since these entities are based abroad, they do not have any tax liability here. The idea is not to bring them under the tax net. There is an enabling clause that allows the government to notify entities that would not be covered, and exporters will be excluded," said a senior government official.
A seller of goods has to deduct TCS at the rate of 0.1% before making payments in excess of ₹50 lakh. In cases where the buyer doesn't have a Permanent Account Number (PAN) or Aadhaar — which is the case with exports — the rate will be 1%, says the budget proposal.
Budget measures too long term, unlikely to meet growth targets in FY21: Crisil
Budget didn't have measures to boost auto demand: TV Narendran, Tata Steel
Budget for export sector
tax at source