1. GST must not cover labour-intensive sectors: Nirmala Sitharaman tells Arun Jaitley

GST must not cover labour-intensive sectors: Nirmala Sitharaman tells Arun Jaitley

The commerce and industry ministry has suggested exemption for leather, plantations, export-sensitive services sectors like tourism and hospitality from the goods and services tax (GST) ambit.

By: | New Delhi | Updated: January 5, 2017 6:46 AM
Union minister of state for commerce and industry Nirmala Sitharaman. (PTI) Union minister of state for commerce and industry Nirmala Sitharaman. (PTI)

The commerce and industry ministry has suggested exemption for leather, plantations, export-sensitive services sectors like tourism and hospitality from the goods and services tax (GST) ambit.

In a meeting with finance minister Arun Jaitley on Tuesday, commerce and industry minister Nirmala Sitharaman also said there was a need to review the current time-consuming process of refunds claimed by exporters against the duty paid on imports of raw materials or other items already made under various schemes in the new indirect tax regime. So imports of capital goods under the Export Promotion Capital Goods Authorisation Scheme and those of raw material under the Advance Authorisation scheme need not be taxed upfront, as refund claims typically take 6-8 months (although they are being expedited) to be processed, blocking the capital of a firm, she said.

Under the EPCG scheme, the import of capital goods required for the manufacture of resultant export products is mostly allowed at zero duty. Advance authorisation allows duty-free import of inputs that are physically incorporated in export product for purpose of value addition and re-exports. Also, certain other incentives currently enjoyed by exporters need to continue.

She said the transportation of goods from one SEZ to another such duty-free enclave in some other state should not attract the integrated goods and service tax, which is charged in case of the movement of goods and services from one state to another.

On leather and plantations, Sitharaman said keeping in mind the labour-intensive nature of these sectors, they should be exempted from GST. “If such a move is not possible, at least, the lowest GST rate (5%) should be imposed,” she said.

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