** Sagar Sandesh print version ceases to be published from December 31, 2017. New look E-paper would be available from Jan. 1, 2018 onwards. free of cost.**

Exporters who are in doldrums may get some relief in GST soon

Exporters may get an outright exemption from the integrated goods and services tax (IGST) on imported inputs that currently don't face basic customs duty to help assist the sector.

Also under consideration is a refund mechanism for taxes paid on local inputs used by exporters. The exporters are already reeling under the impact of rupee appreciation which had made their goods less competitive in the international market.

A decision in the matter is expected to be taken by the GST Council, when it meets on October 6.

Exporters had access to duty-free inputs under the previous tax regime. Some of these inputs continue to be exempt from basic customs duty, but face IGST. Industry wants at least these inputs exempted under the GST regime to begin with. The industry says outright exemption would provide long-term solution to its woes.

The biggest issue for exporters at present is liquidity crisis forcing them to close down their industry.  There is issue of blocked refunds and payment of taxes has to be done upfront. Banks do not provide loans for payment of taxes. Exemption will help provide a solution on a long-term basis.

Expeditious refunds will help address the immediate problem of liquidity according to spokesman of all the regions of Federation of Indian Export Organisations (FIEO).

Embedding of taxes makes Indian products uncompetitive as other nations do not levy any tax on goods meant for export they said.

The problem has been compounded for exporters as there has been a delay in the refund of taxes they paid on inputs, leading to working capital issues. If the GST Council decides on such a framework for exporters, it will resolve the issue of cash flows and bring them on par with their foreign counterparts. Exporters are not taking fresh orders according to spokesman of the southern region of FIEO. Many units have informed the employees of their decision to fold up as liquidity crisis is mounting by the day.

The government is keen to address issues concerning exports expeditiously since the sector contributes substantially to job creation, as it seeks to revive growth that slumped to a three-year-low in the June quarter.

The issue is being looked at with a sense of urgency according to commerce ministry sources. The government will ensure that the domestic industry isn't put to any disadvantage on account of the strategy to help exporters. Finance ministry officials have been holding intensive deliberations on the framework of the scheme.

Officials of the finance and commerce ministry are holding extensive discussions on providing substantial relief to the exporters.

Exporters, particularly the smaller ones, have begun to face working capital issues with tax refunds getting stuck after the rollout of GST on July 1. They are also unable to price their products for advance Christmas orders as there is no clarity on refunds. This trend would have broader ramifications for the country's exports

The rupee's climb has eroded export competitiveness, with the currency strengthening nearly five per cent against the dollar since the beginning of the year.  The rupee closed at 65.12 versus the dollar on September 25,

According to FIEO, the cumulative order book position is down 15-20 per cent from the year earlier. India exported goods worth 274.6 billion US Dollars in FY17, just 4.7 per cent higher than 262.2 billion US Dollars in FY16.

Exporters have claimed that refunds worth Rs 65,000 crore in the July-October period are stuck. The government has disputed this figure.

The refund issue has cropped up largely due to the extension in the filing date for returns following technical glitches in the GST Network.

 The GST Council at its last meeting had set up a committee headed by revenue secretary Hasmukh Adhia to look into the issues faced by exporters and draw up a plan for their resolution. The panel held detailed discussions with exporters and is now working on a framework to resolve them.


Copyright © 2017 PORT TO PORT - Shipping Services Portal ( Sagar Sandesh ). All rights reserved.

Follow Us