Skip to main content

GST Fog Lifts For Companies In Excise-Free Zones


A proposal to refund central goods and services tax (GST) on items made in formerly excise-free zones in Himachal Pradesh, Uttarakhand and the North-East is set to be presented to cabinet. The move will benefit companies such as Cipla, Dabur, Dr Reddy’s and TVS Motor that invested in those areas because of the tax break. Such exemptions have largely been scrapped under GST as part of efforts to create a common market across India with as few interstate variations as possible. The Expenditure Finance Committee (EFC) has approved the scheme, which is likely to benefit a number of automobile, fast-moving consumer goods (FMCG) and pharmaceutical companies that have invested in these zones.
“EFC has cleared the scheme,” a senior finance ministry official told ET. It will shortly be introduced in the cabinet, he said. Hundreds of pharmaceutical companies including high-profile ones such as Cipla, Dabur, Dr Reddy’s, Johnson & Johnson and Wockhardt have plants in such zones in Himachal Pradesh.
TVS Motor, Lloyd Electric, TAFE and other automobile component makers also have units in the state. Many companies in the cement sector have plants in such zones in the North-East. Department of Industrial Policy and Promotion, which anchors the scheme, will move the proposal for cabinet consideration.
The much-awaited plan provides for refund of 58% of central GST paid by manufacturers in the erstwhile excise-free zones of Himachal Pradesh, Uttarakhand and the North-East. States are yet to take a call on their portion of the levy or state GST. Refunds will be worked out after adjusting for input tax credit due, said the official cited above.
Most exemptions have been scrapped under the GST regime barring some essential goods but the government decided to grandfather the excise exemption for special category states to ensure a smooth transition. Industry had expected the rollout of the scheme along with GST, but the plan wasn’t ready at the time. “It would be in place before the first payment of GST becomes due,” said a government official.
Companies have to pay GST by August 20 after which they can file refund claims. Industry will have to seek refunds in line with detailed guidelines for the new scheme.
Tax experts sought a mechanism that provides complete tax benefit.
“Companies that have invested in area-based exemption zones are eagerly waiting to know the mechanism by which the refunds will be granted along with the time lines,” said Anita Rastogi, partner, PwC. “It is critical that the benefit in whole is available.” GST, which was put in place on July 1, replaced 17 central and state taxes besides 23 cesses.
The Economic Times, New Delhi, 25th 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…

New money laundering norms stump jewellery sector

New money laundering norms stump jewellery sector Dealers with turnover of Rs 2 crore and above covered; industry says threshold too low The central government has notified the money laundering rules for the gems and jewellery sector with immediate effect. Now, any entity deals in precious metals, precious stones, or other high-value goods and has a turnover of Rs 2 crore or more in a financial year will be covered under the Prevention of Money Laundering Act, 2002 (PMLA, 2002). The limit of Rs 2 crore would be calculated on the basis of the previous year’s turnover, said the notification. The directorate general of goods and service tax intelligence has been appointed under the Act. Sources said the government’s move to apply the PMLA to the jewellery sector was a fallout of income-tax raids on jewellers soon after demonetisation last November, when it was found that they sold gold and jewellery at a huge premium and accepted old currency notes as payment. The notification, issued on Augus…

Confusion over branded food GST

Confusion over branded food GST The GST Council's statement over the weekend on applying tax on branded food items has left most of the trade confused.

Even though the Council has not changed the rates on food -0 per cent on unbranded stuff and 5 per cent on brands -many small traders who didn't levy GST earlier said they could come under the 5 per cent slab after the clarification.

While they predicted some increase in consumer prices, large players said they can absorb GST in many ways and keep prices steady.

"Trade is confused and hence on behalf of our chamber, we have asked our members to go ahead and charge 5 per cent GST," said Sushil Sureka, general secretary of the Ahilya Chamber of Commerce and Industry in Indore.

The statement clarifying the application of GST came after some businesses were found deregistering their brands and selling under corporate brand name without paying tax, after the Council exempted unbranded food from the new all-encompassing indirec…