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

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…