Exporters seek e wallets & GST exemption

Exporters seek e wallets & GST exemption

Exporters have suggested the idea of instituting an ewallet mechanism for small and medium enterprises (SMEs) and complete exemption for merchant exporters, who have been hit by an unavailability of working capital in the goods and services tax (GST) regime.

In a meeting with Finance Minister Arun Jaitley on Thursday, the Federation of Indian Export Organisations (FIEO) said the system may be instituted sinceasignificant number of firms are still disproportionately affected byacapital crunch.

"Government may consider introduction of e-wallet for exporters in which, based on the preceding year´s exports and an average GST rate, ecurrency is credited to exporters´ accounts.

Like a running account, money may be debited from the e-wallet when dutypaid supplies have to be undertaken and the amount may be credited when the proof of export is made available from ICEGATE," FIEO said inastatement to finance ministry officials.

Exporters were earlier allowed dutyfree import of goods used for making products for export.

With GST, they have to first pay the duty and later apply forarefund. Asaresult, their costs have risen by up to 1.25 per cent (freight on board value) since July 1.The idea had earlier been mooted by traders before the new tax regime was rolled out.Subsequently, it has been shunted back and forth between the ministries of commerce and finance until it fizzled after sustained opposition from the department of revenue,asenior official said.

Also for SMEs, the provisional input tax credit period has been suggested to be increased by six months from the current two months by industry body CII. “This will help crossmatching of invoicesthroughtheGSTNportaland also avoid the blockage of working capital for the small players,” said Chandrajit Banerjee, DirectorGeneral of CII.

Exporters have also asked for GST exemption against an electronic bond for merchant exporters, who account for over 30 per cent of the nation´s exports.Operating on low margins of 24 per cent, many of them have stopped entering into new contracts, which may see exports in the next quarters disrupted, Fieo has said.

Asacase in point, two months after the rollout of the GST regime in July, the order books of exporters are said to have takenahit, with estimates pegging the impact at up to 15 per cent across industries and product categories.

According to an assessment by FIEO, the large drop was for export orders that were meant to be delivered until October.Beyond October, this may rise to 20 per cent, as exports during Christmas and New Year may be affected.After growing in the single digits in the previous three months, exports in August had risen by 10.29 per cent, up from 3.94 per cent in July.But exporters and economists alike remain sure that the coming months would prove to be the real challenge for merchandise exports.

EXPORTERS WORRIED

Ewallet for exporters may be calculated based on preceding year´s exports and an average GST rate

Based on this, ecurrency may be credited to exporters´ accounts and taxes levied may be debited from here

Exporters have also demanded complete exemption from the GST for merchant exporters

Sending out about 30% of all exports, the category has been operating on razorthin margins and have stopped taking orders

Order books of exporters have dropped by 15% for consignments slated till October

The Business Standard, New Delhi, 29th september