Date:15/07/2005 URL: http://www.thehindubusinessline.com/2005/07/15/stories/2005071503141700.htm

Back Textile exporters upset over service tax on air cargo

Our Bureau

Coimbatore , July 14

TEXTILE exporters from Tamil Nadu have resented extending the service tax on air cargo under export of services rules by the Central Excise authorities, the nodal agency for collection of service tax.

The 10.2 per cent tax on the airfreight of export consignment that came into effect on June 16 will upset the cost calculation of the shippers in deciding their exports.

The Karur Textile Manufacturer Exporters' Association, in a communication, has stated that many textile exporters negotiate their shipment on c.i.f (cost-insurance-freight) basis by collecting the freight from the buyers in foreign currency and this way the freight becomes part of their export pricing.

This being the case, the levy of service tax on airfreight incorporated in the billing by the cargo handling agency/the airline concerned will have no justification, the association has said.

Already, the small and medium textile exporters are burdened with the payments of service tax on their courier (used for sending textile samplings), truck hire charges and lately the levy on bank withdrawals.

Textile exporters are forced to operate with low margins due to cost pressures caused by stiff competition, fluctuating raw material prices/exchange rate and surge in fuel costs. The new levy on the airfreight will further push up the transaction cost on exports, the association said and asked the Union Government to withdraw the last month's notification extending the levy.