Skip to main content

States not releasing duty drawback refund: Exporters

States not releasing duty drawback refund: Exporters
State governments have effectively stopped paying tax refunds under the duty drawback scheme, compounding problems of exporters.
Exporters alleged that since the goods and services tax (GST) was introduced, refunds for the state component of taxes had dried up under the duty drawback scheme because the requisite mechanism was not in place.
“While it is still possible to get states to pay their share of refunds under the integrated GST, refunds to be paid fully by them are not materialising,” said Ajay Sahai, directorgeneral of the Federation of Indian Export Organisations.
The problem was spread across the country, he added.
The duty drawback scheme seeks to rebate duty on any imported or excisable material and service used in the manufacture of goods for export.
Customs, excise and service tax in respect of inputs are neutralised under the scheme.
The Central Board of Excise and Customs, which administers the scheme, had decided to extend it by three months once the GST was introduced on July 1. This was done after exporters had pointed out that the scheme seamlessly reimbursed tax incidence on inputs.
But to avail the duty drawback benefits exporters must not claim input credit under the GST, the government had said.
Exporters´ costs have gone up by up to 1.25 per cent (freight on board) after the GST implementation, according to industry calculations.
Late refunds affect smaller players more and larger firms are facing difficulties in streamlining operations.
A similar issue is at play over duty scrips, the scope of which has been reduced as a tax paying instrument.
Exporters earn duty credits in the form of scrips at fixed rates of 2 per cent, 3 per cent and 5 per cent upon dispatching shipments.
The scrips can be freely transferred or sold.
The government had in August, instituteda12 per cent tax on sale of scrips received for exportincentive schemes such as the Merchandise Export from India Scheme, the Services Exports from India Scheme and the Incremental Export Incentivisation Scheme.
The government´s move had met with opposition from exporters, who claimed it had no justification and affected exports.
The GST Council last week announced the tax was being reduced to 4 per cent.
However, while scrips were earlier allowed to be used for payment of excise, service tax and VAT, they can only be used for payment of basic Customs duty now. “This has added to the cash outgo for exporters,” the EngineeringExportsPromotionCouncil said.
Exporters have demanded that the scrips be allowed to neutralise central and state GST or Integrated GST.
The Business Standard, New Delhi, 14th September 2017


Popular posts from this blog

At 18%, GST Rate to be Less Taxing for Most Goods

About 70% of all goods and some consumer durables likely to cost less

A number of goods such as cosmetics, shaving creams, shampoo, toothpaste, soap, plastics, paints and some consumer durables could become cheaper under the proposed goods and services tax (GST) regime as most items are likely to be subject to the rate of 18% rather than the higher one of 28%.

India is likely to rely on the effective tax rate currently applicable on a commodity to get a fix on the GST slab, said a government official, allowing most goods to make it to the lower bracket.

For instance, if an item comes within the 12% excise slab but the effective tax is 8% due to abatement, then the latter will be considered for GST fitment.

Going by this formulation, about 70% of all goods could fall in the 18% bracket.

The GST Council has finalised a four-tier tax structure of 5%, 12%, 18% and 28% but has left room for the highest slab to be pegged at 40%. A committee of officials will work out the fitment and the council…

Coffee-Toffee, the GST Debate Continues

Hundreds of crores of rupees in the form of taxes ride on the exact categorisation of products Is Parachute hair oil or edible oil? Is KitKat a chocolate or a biscuit? Is a Vicks tablet medicament or confectionery? For the taxpayer and the tax collector, this is much more than an exercise in semantics -hundreds of crores of rupees ride on the exact categorisation.
As the government moves closer to rolling out the goods and services tax (GST) on July 1, many such distinctions are being debated so that no ambiguity remains. Not just that, the government is revisiting old tax cases that were lost over product categorisation, according to people with knowledge of the matter, presumably with a view to making sure that revenue collections can be maximised. “In the past, several tax officers had challenged some of the product categorisations, including those in the retail segment, but lost out in court or at appellate level,“ said one of the persons. “Now we have a chance to go ahead with speci…

Deposit gush:-CA Institute Bats for Special Audit