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

Household debt up, but India still lags emerging-market economies: RBI

  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...

External spillovers likely to hit India's financial system: RBI report

  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...