Skip to main content

Tweak GST rules or exports will suffer: Industry tells Adhia

Tweak GST rules or exports will suffer: Industry tells Adhia
Trade & industry bodies have warned that slowdown in orders, liquidity crisis may lead to Rs 65,00 cr of exports getting stuck
A severe slowdown in foreign orders, combined with a growing liquidity crisis, may get out of hand by the year-end if rules of export under the goods and services tax (GST) regime are not altered soon, industry bodies have warned.

At a meeting with Revenue Secretary Hasmukh Adhia-led GST committee - set up to look into exporter concerns on Tuesday - trade and industry bodies pointed out that the deferment in mandatory filing of GST return forms as well as extreme difficulty in receiving tax returns was hurting exports, sources present said.

This may lead to a Rs 65,000-crore worth of exports being stuck by the end of the year, director-general of the Federation of Indian Exports Organisations (FIEO), Ajay Sahai said.

Two months after the roll-out of the GST regime in July, the order books of exporters are said to have taken a hit, with estimates pegging the impact to up to 15 per cent across industries and product categories.

According to an assessment by the 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 single digits in the previous three months, August exports 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.

That is largely due to the tax refund issues under the GST regime still remaining two months down the line, exporters complaining of crippling liquidity, and the rupee expected to climb steadily in the coming months.

The deferment of the mandatory filing of GST return forms are holding up tax refunds for exporters and magnifying the liquidity crisis being faced by the sector, exporters have told the government.

They have also pointed out that due to the government’s decision to defer the filing of GSTR forms 1, 2 and 3 for July, huge capital has been blocked. The government has extended the filing of all three forms for the month of July to October 10, October 31 and November 10, respectively.

“If the current situation persists, the liquidity crisis for exporters will become even more difficult, as they would receive no tax refunds for four months from July to October,” Sahai said. As an immediate measure, he said refunds should be provided on the basis of GSTR-1, with excess refunds being adjusted after regular filing by exporters later.

On this note, the Confederation of Indian Industry (CII) has suggested the government consider special initiatives for promoting exports, including examining certain provisions under the GST regime.

According to the CII, payment of integrated GST (IGST) for imports should be allowed to be debited under the advance authorisation scheme. Further, advance receipts for exports should be exempt from payment of IGST.

The chamber has also pointed out that the new GST rules should be updated, so that a manufacturer who supplies goods to an exporter for onward trade should be considered as an exporter. Thus, GST should not be applicable on interstate sales by manufacturers to export trading houses, similar to what had been the case earlier, it said.

GST SHADOWS ON EXPORTS

Exporters claim liquidity crunch has reached crisis levels due to GST

This has led to orders being forgone; orders fell by 15% till October

Govt decision to defer mandatory filing of GST return forms are holding up tax refunds

Other returns such as those under advance authorisation scheme also stuck

The Business Standard , New Delhi, 20th september 2017

Comments

Popular posts from this blog

Govt’s gamble on GST cuts: What do the bond and currency markets signal?

  It’s not just humans who suffer from cognitive biases; markets do too. Interestingly, different financial markets exhibit distinct biases, each interpreting events through its own prism of prejudice. Take the recent announcements on GST reforms: equity markets have chosen to view them through the lens of growth, while bond and currency markets are focusing on potential macroeconomic risks—fiscal pressures and current account challenges. So, which lens captures the true pulse?Equity markets may be right in expecting GST reforms to revive consumption, which has remained lacklustre for a while. But the key question remains—will this revival come at the cost of broader macro stability?It is well known that consumption stocks have rallied since the GST rationalisation announcement. But what about bond markets? What signals are they sending since this rejig was announced from the ramparts of the Red Fort?The signs aren't encouraging. Bond prices have slumped and yields have surged sinc...

Luxury carmakers urge clarity on GST rates to boost festive season sales

  A clear picture regarding new GST rates at the earliest will help the overall auto industry, including the luxury car segment, to regain momentum in the ongoing quarter, which generally sees enhanced sales on account of the festive season.The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on September 3-4 to discuss moving to a two-slab taxation.In an interaction with PTI, BMW Group India President and CEO Hardeep Singh Brar said the recent speculation about the change in GST rates has caused uncertainty in the minds of consumers.Consumer interest and demand is strong, but they (prospective buyers) have adopted a wait-and-watch approach, and this delayed decision-making is impacting new vehicle sales at a certain level, he noted."Expediting clarity on GST rates is essential to get back to speed and ensure the auto sector's contribution to economic growth during this quarter is robust," Brar stated.He also hoped that the sustainable p...

Sebi proposes tighter norms for green bond third-party reviewers

  Sebi on Friday said it has proposed to tighten the norms to appoint independent third-party reviewers or certifiers for green debt securities to align them with requirements for other ESG-linked bonds.In a draft circular, Sebi said that the current norms for green bonds, introduced in February 2023, lack detailed requirements around reviewer independence, conflict of interest mitigation, and disclosure standards that are now in place for other ESG-linked securities under a June 2025 circular.The regulator's latest proposal seeks public comments on a revised framework that would bring parity by incorporating comprehensive criteria for third-party certifiers of green bonds on non-convertible securities.Under the proposed norms, issuers of green debt securities will need to appoint reviewers who are independent of their management, directors, and key managerial personnel. These reviewers will be remunerated in a way that prevents any conflicts of interest and possess relevant expert...