India’s largest knitwear and readymade garment exporters organisation, Tirupur Exporters’ Association (TEA), has sought exemption of the IGST levy on imports of accessories, early clearance of accumulated input tax credits, permanent deletion of Reverse Charge Mechanism (under Section 9(4) of GST) and incentives for investments made in labour accommodation infrastructure. A delegation of TEA, which met Union finance minister Arun Jaitley recently with a memorandum, pointed out that till June 30, 2017, apparel exporters were importing accessories such as zips and tags without payment of customs duty, using the Export Promotion Certificate (EPC). But post implementation of GST, imports using EPC is being subjected to IGST. As most of the accessories are being taxed at 18%, this is causing huge working capital blockade, resulting in significant hardship to the industry. Explaining the issues in detail, the memo said that similar problems were faced by exporters in import of capital goods under the Export Promotion Capital Goods Scheme and raw materials through the Advance Authorisation Scheme, and the government had redressed these issues by issuing a notification, dated October 13, which exempted imports under the two schemes from levy of IGST. However, the EPC scheme was omitted, and should also be included, argued TEA. It has requested for a separate notification to be issued in line with the notification exempting imports of accessories using Export Promotion Certificate from the purview of IGST levy, the TEA memorandum said.
Expeditious release of refunds which are due to exporters is another issue before the union finance ministry. The original plan under the GST compliance framework was filing of GSTR 1, 2 and 3 by all taxpayers resulting in matching of tax credits, thereby facilitating release of refunds due to exporters expeditiously within seven days of the claim. However, due to various reasons, filing of GSTR-2 and 3 are dispensed with till March 2018 and substituted by a self-declaration in Form GSTR 3B, but there is no possibility of matching of credits till March 2018. In this scenario, a manual procedure for claim of refund by exporters was prescribed through a notification dated November 15, followed by a detailed circular dated November 15, prescribing the procedure to be followed for release of manually processed refunds. Hence, in order to avoid inordinate delay in release of refunds, it is requested that a clear-cut procedure may be prescribed listing out the evidences required to be furnished to the authorities along with the RFD-01A form, said the TEA memorandum.