Skip to main content

Export Norms Changed To Clear Procedural Mess After Gst


In a move to sort out the procedural mess that exports have got stuck into after the roll-out of the goods and services tax (GST), the Customs department has notified that currency exchange rates for drawback purposes would be announced on a fortnightly basis, as was the case earlier.
“Customs duty is payable only in the rupee, and GST norms had stipulated that foreign exchange conversions should be according to the Reserve Bank of India’s reference rate, which is updated on a daily basis. Traders had complained that it made processing large volumes of payments difficult,” said Abhishek Jain, tax partner, EY. Now, traders can go back to paying the free-on-board (FOB) value of exports based on the rupee value according to the exchange rate notified by the Customs department for drawback purposes, Jain said. For services exports, any generally accepted accounting basis is allowed.
The circular also allowed self-certification for higher duty drawback. “Being asked to furnish a certificate from tax authorities stating that exporters will not claim benefits under the new GST regime if he claims higher duty drawback was causing problems,” said Ganesh Gupta, president, Federation of Indian Exports Organisations (FIEO).
Tax authorities were not issuing such a certificate and, in its absence, grant of lower drawback was affecting the liquidity of businesses, especially those operating in the small and medium enterprises segment, and complicating administrative work at the exporter’s end, he said.
Even services exporters are facing roadblocks — previously not having had to submit any letters but now required to do so. “Exporters are reluctant to export as getting certificate from GST authorities only adds to the transaction time and cost,” FIEO said in a representation to the finance ministry. The new move is expected to save the transaction time and cost, but exporters have been advised to to do their own calculation while claiming higher drawback as they have to forego IGST refund/ITC refund/carry forward of CENVAT credit.
The circular also clarified that while supplying to SEZs for export purposes or otherwise, traders need to mention whether it was being done under an LUT (letter of undertaking) or a bond. 
After the GST implementation, exporters had raised the issue of lack of clarity on norms relating to submission of bonds or LUTs for clearance of export consignments and sought IGST exemption. 
However, earlier this month, the government had said big exporters with a good track record can give an LUT to the customs department while small exporters would have to give a bond to seek IGST exemption. But problems in this regard have persisted.
The Customs department has notified that currency exchange rates for drawback purposes would be announced on a fortnightly basis The traders can now go back to paying the free-on-board value of exports based on the rupee value according to the exchange rate The new tax regime is expected to save the transaction time and cost Big exporters with a good track record can give an LUT to the Customs department, while small exporters would have to give a bond to seek IGST exemption.
The Business Standard, New Delhi, 31st July 2017

Comments

Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

RBI rushes in to prop up falling rupee

RBI rushes in to prop up falling rupee India’s central bank reportedly intervened in the currency markets on Monday to prevent a further slide in the local unit, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. The rupee is the worst performing among a dozen Asian monetary units in the past three months. It lost 4.25 per cent to the dollar during the period, show data from Bloomberg. On Monday, the Reserve Bank of India (RBI) is said to have sold about Rs 800 million collectively on the spot and exchange traded futures markets, dealers said. An email sent to RBI remained unanswered until the publication of this report. The currency market has seen such a strong central bank interven…

GST Refund of Rs 20,000 Cr Pending: Exporters’ Body

GST Refund of Rs  20,000 Cr Pending: Exporters’ Body Refund of over Rs 20,000 crore on account of Goods and Services Tax (GST) is pending with the government with more than half the amount stuck as input tax credit, Federation of Indian Export Organisations said on Tuesday. While claims over Rs7,000 crore were cleared in March, the amount was Rs 1,000 crore in April.However, after exporters’ request, the GST council and tax department are organizing a second phase of Special Refund Fortnight starting May 31, which will enable exporters to draw their refunds at a speedy pace. Many exporters have been unable to file the refund of input tax credit due to technical glitches, exports and claim happened in different months. The major challenge lies on ITC refund especially because the process is partly electronic and partly manual which is cumbersome and add to the transaction cost, the exporters’ body said. On IGST, refunds are getting delayed due to airline and shipping companies not submitt…