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India's exporters have proposed to the finance ministry a turnover tax that will replace the income tax, arguing that such a tax will dispense with all other direct taxes and exemptions including depreciation.

The Economic Times reports that the exporters' body, Fieo, also recommends the incorporation of investment-linked tax incentives for the labour intensive MSME sector to enable investment in capital machinery and equipment. It further suggested enhancing the depreciation rate from 15% to the previous level of 25%.

The Times says that Fieo has also asked that the rate for export credit should be fixed at 6% without any link to the benchmark prime lending rate. Fieo also reiterated its demand for exemption from service tax for both exporters as well as export promotion councils and other export organisations.

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