New Delhi: Tax incentives to exporters will be lowered from Oct 1 as the government said Friday it will replace the popular tax refund scheme, Duty Entitlement Pass Book (DEPB), with a new drawback scheme from the beginning of next month. After unveiling a transitory scheme for the 14-year old DEPB scheme, Finance Secretary R.S. Gujral said tax refunds on exports of 1,100 items will be reduced by 1 to 3 percent.

“An endeavour has been made to soften the reduction and transition from the DEPB to duty drawback scheme,” Gujral told reporters.

Exporters of engineering, chemical, pharmaseuticals, marine and textile products are the major beneficiaries of DEPB scheme. Tax refunds under DEPB scheme resulted in the revenue loss of Rs.8,700 crore to the government exchequer last fiscal.

Chairman of Central Board of Excise and Customs S.D. Majumdar said revenue loss would be reduced significantly due to the replacement of the DEPB scheme.

The reduction in tax incentives might affect the growth of exports.

India's exports jumped 54.2 percent at USD 134.5 billion in April-August period, led by a sharp increase in exports of engineering goods.