The woes of exporters, including the blockage of working capital under the goods and services tax (GST), dominated the meeting of stakeholders with finance minister Arun Jaitley on Thursday.
The woes of exporters, including the blockage of working capital under the goods and services tax (GST), dominated the meeting of stakeholders with finance minister Arun Jaitley on Thursday. The GST Council is expected to announce measures to unburden exporters in its meeting on October 6. Under GST, exporters are required to pay the new tax on inputs and claim refund when the actual exports take place. However, after the government postponed filing of invoice-wise detailed returns (GSTR-1, GSTR-2, GSTR-3), the refund has also been stuck as invoice matching cant be done with the interim summarised return (GSTR-3B). The absence of refund has forced exporters to borrow for their working capital needs. “Small exporters are particularly hit with GST as they have to borrow money to pay the tax. Availability and the cost of credit is adversely impacting them. The government should consider introduction of an e-wallet for exporters,” Federation of Indian Export Organisations (FIEO) president Ganesh Gupta said after the meeting.
FIEO is also believed to have asked for exemption from GST for merchant exporters, immediate start of the refund process with exporters facing liquidity issues and allowing export benefit scrips for payment of IGST and CGST. The finance ministry clarified last week that for nearly 66% of the value of exports, exporters opted for the duty drawback scheme (they did not pay taxes on inputs) instead of refund mechanism, which implies no blockage of working capital. Only the remaining exporters used the refund mechanism. However, the finance ministry has indicated that the Council may devise a mechanism to refund exporters sooner in its meeting next Friday.
“Filing of GST return may be made on a quarterly basis, against the current monthly filing requirement as the MSME sector is still not well equipped with the IT infrastructure,” Chandrajit Banerjee, director-general, CII, said. Additionally, the industry has also demanded that the threshold for triggering payment under reverse charge mechanism (RCM) be raised to Rs 50,000 from Rs 5,000 currently to reduce compliance burden on small industries. The industry also demanded exemption from IGST on procurement of precious metals from nominated agencies for the purpose of manufacturing and export of jewellery.
Representatives from KPMG, CII, Ficci, Gems and Jewellery Export Promotion Council, Laghu Udyog Bharati, GST service providers, ICSI, Institute of Chartered Accountants of India and Amazon were present.