Parliamentarians have favoured fresh
concessions to labour-intensive exporting sectors such as textiles, leather,
gems and jewellery to mitigate the compliance burden incurred in transitioning
to the goods and services tax (GST) regime that was rolled out on 1 July.
A parliamentary panel which went into the problems of the small scale
industry that contributes nearly fifty per cent of the country's exports has
asked the finance ministry to allow exporters to use the old system of refunds
through the so-called duty drawback scheme.
The Parliamentary Standing Committee on Commerce sought the intervention,
claiming that the GST compliance burden was causing job losses in
labour-intensive export sectors. They are also suffering from working capital
problems due to delays in securing refunds from the government under the GST
Under the duty drawback scheme in the pre-GST era, exporters could claim
rebates on taxes such as service tax and excise duty. After GST was introduced,
the government pared the duty drawback rates as exporters were supposed to
claim refunds after paying taxes.
Sources in the committee are of the view that the small scale exporters who
are labour intensive don’t want to get into the process of first paying duties
and then seeking GST refunds. The committee is likely to take up the issue and
make suitable recommendations.
Any decision to amend the rules will have to be cleared by the GST
Council—the apex federal body made up of state finance ministers and headed by
Union finance minister Arun Jaitley.
The finance ministry officials are understood to have assured the standing
committee that they will take up the issue with the GST Council, the source
said. The report is likely to be presented to Parliament during the winter
session beginning 15 December.
India’s merchandise exports declined for the first time in 14 months in
October as exporters struggled with a liquidity crunch because of delayed
refunds under the GST regime. Shipments of ready-made garments declined by
nearly forty per cent and gems and jewellery by nearly twenty five per cent.
If the situation continues, the apparel export industry may suffer massive
job losses according to a spokesman of the apparel export association.