Skip to main content

GST Council set to consider measures to help exporters

GST Council set to consider measures to help exporters
In a move to support exporters recovering from a prolonged contraction, the goods and services tax (GST) Council headed by finance minister Arun Jaitley is set to consider new measures for a quick refund of taxes paid by them.Measures for the swift processing of refund claims, which will be taken up at a meeting of the council on Friday, will improve the liquidity of exporters.
An official privy to the discussions in the council said on condition of anonymity that the indirect tax body will consider the report of a panel led by revenue secretary Hasmukh Adhia which examined ways to avoid blocking exporters’ funds. The panel set up by the council had sought exporters’ views in August.
Exporters are likely to be allowed refunds without waiting for the invoice details of raw materials and other purchases, but based on the summary of all transactions and details of exports made.
Exporters have made a series of demands including exemption of imported raw materials from GST rather than having to pay tax first and claiming a refund later. They say they are losing their competitive edge and are facing a liquidity crunch due to delays in GST refunds and upfront payment of GST on inputs for exports.
Exports constitute around 20% of India’s gross domestic product (GDP and a decline in overseas shipments could aggravate a slowdown in the economy, which grew 5.7% in the June quarter, the slowest pace in three years. All taxes that go into exported products are refunded by the government to make these products competitive in global markets.
The countervailing duty (CVD), and special additional duty (SAD) levied on imports under the earlier tax system have now been replaced by integrated GST (IGST) on imports. While exporters earlier used to get advance authorization and did not have to pay taxes for import of inputs for export purposes, now they pay IGST, which locks up their working capital due to absence of a quick refund mechanism. Extension of the last day for filing GST also delays refunds to exporters.
“Steps that will quicken the processing of refunds without actually compromising the basic design of GST would be easier to implement,” said Abhishek Jain, partner, indirect taxes, EY.The problems faced by exporters under GST regime had been expected, international trade expert T.N.C. Rajagopalan said.
“The GST Council needs to streamline the refund mechanism especially for the merchant exporters, advance license holders and exportoriented units at the earliest,” Rajagopalan said.
The Federation of Indian Export Organisations (FIEO) said in a representation before finance minister Jaitley last week that most exporters didn’t have the financial wherewithal to pay GST liabilities for three months without being refunded.
Exporters may be provided GST refund based on GSTR-1 (the return relating to supplies) and GSTR-3B (a summary of transactions) so that the cash flow to export sector is maintained, FIEO said.
The lobby group also urged the finance ministry to introduce an e-wallet for exporters in which based on the preceding year’s exports and an average GST rate, e-currency is credited to exporters’ account. “Like a running account, money may be debited from the e-wallet when duty-paid supplies have to be undertaken and the amount may be credited when the proof of exports is made available,” FIEO said.
The Mint, New Delhi, 03rd 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…