Skip to main content

Diwali comes early for SMEs, exporters

Diwali comes early for SMEs, exporters
The Goods and Services Tax (GST) Council on Friday took major decisions to prevent working capital of exporters from getting locked up and reduce the compliance burden on small and medium enterprises, while reducing rates on 27 items of daily use, including khakhra,which may help the ruling party, the BJP, in pollbound Gujarat.
It deferred implementing the controversial eway Bill and the reverse charge mechanism.The Council also postponed imposing tax deducted or collected at source, which will particularly benefit ecommerce companies.It also decided to set up a committee to frame principles to reduce rates, depending on revenue patterns of the GST so that no ad hoc decision was taken, said Finance Minister Arun Jaitley, who chaired the Council meeting.
Exporters will start getting credit for the integrated GST (IGST) paid for July from October 10 and for August from October 18. Other refunds of the IGST paid on supplies to special economic zones (SEZs) and of input taxes on exports under bonds or the letter of undertaking would also be processed from October 18.
Both Central and state officials will be empowered to do so. The decision, an interim one, was based on the recommendations ofacommittee headed by Revenue Secretary Hasmukh Adhia.Besides,there would be longterm solutions for exporters—a facility of e-wallet will be set up, preferably by April 1 next year.
There will be a notional amount in the ewallet to give advance credit to exporters. This credit will be used to pay the IGST or GST for his products.Refunds that exporters get will be used to offset this advance credit.A technology firm will develop the e-wallet.This decision was taken since no sector could be exempt from the GST. Till then, merchant exporters will pay the nominal GST at the rate of 0.1 per cent for procuring goods from domestic suppliers for export.
Those possessing Advance Authorisation licences come under the Export Promotion Capital Guarantee Scheme and 100 percent export oriented units need not pay the IGST and cess on imports.Also, domestic supplies to these exporters would be treated as deemed exports and refunds of tax paid on such supplies be given to the supplier.
The Council allowed those with an annual turnover of upto Rs 1.5 crore to file returns and pay taxes quarterly from October.It also raised the eligibility limit in terms of annual turnover to Rs one crore from the current Rs 75 lakh for the composition scheme, which allows a flat rate and easy compliance.

The assessees are required to file and pay taxes only quarterly under this scheme.Under the scheme,a trader pays the GST at one per cent,a manufacturer at two per cent and a restaurant owner at 5 per cent, but they are not allowed input tax credit.And they are permitted to file quarterly returns.
The two moves are aimed at reducing the compliance burden on small and medium enterprises.Jaitley said 9495 per cent of taxes came from big taxpayers.“While taxes paid by small and medium tax payers are small, the compliance burden on them was huge,” he said.About 90 per cent taxpayers under the GST has an annual turnover of up to ~1.5 crore.

There are approximately 9.8million assessees under the GST with 7.2 million migrants from the old tax regime and 2.6 million new assessees.Archit Gupta of ClearTax says, “Unless the scope of the composition scheme is widened it may not see much favour.
The services sector is still devoid of the benefits of this scheme.” The Council deferred the reverse charge mechanism (RCM) till March 31, 2018. In the GST the one selling goods and services has to pay the tax. But under the RCM, those buying goods and services from unregistered entities have to pay the tax.
This move will help many companies but it will be particularly helpful for small enterprises since bigger companies were asking them to register.Those with an annual turnover of Rs 20 lakh are exempt from registration.The controversial proposal of the eway Bill has also been put off. It is in force in Karnataka on an experimental basis.Jaitley said the experiment had been successful.

It will be put in place in other states from January next year till March 31 of that year. But the eway Bill has been notified.The Bill is required even if goods are transferred from one vehicle to the other.

The Business standard, New Delhi, 07th October 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…

RBI rushes in to prop up falling rupee

RBI rushes in to prop up falling rupee India’s central bank reportedly intervened in the currency markets on Monday to prevent a further slide in the local unit, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. The rupee is the worst performing among a dozen Asian monetary units in the past three months. It lost 4.25 per cent to the dollar during the period, show data from Bloomberg. On Monday, the Reserve Bank of India (RBI) is said to have sold about Rs 800 million collectively on the spot and exchange traded futures markets, dealers said. An email sent to RBI remained unanswered until the publication of this report. The currency market has seen such a strong central bank interven…

GST Refund of Rs 20,000 Cr Pending: Exporters’ Body

GST Refund of Rs  20,000 Cr Pending: Exporters’ Body Refund of over Rs 20,000 crore on account of Goods and Services Tax (GST) is pending with the government with more than half the amount stuck as input tax credit, Federation of Indian Export Organisations said on Tuesday. While claims over Rs7,000 crore were cleared in March, the amount was Rs 1,000 crore in April.However, after exporters’ request, the GST council and tax department are organizing a second phase of Special Refund Fortnight starting May 31, which will enable exporters to draw their refunds at a speedy pace. Many exporters have been unable to file the refund of input tax credit due to technical glitches, exports and claim happened in different months. The major challenge lies on ITC refund especially because the process is partly electronic and partly manual which is cumbersome and add to the transaction cost, the exporters’ body said. On IGST, refunds are getting delayed due to airline and shipping companies not submitt…