GST council decides to provide relief to exporters

GST council decides to provide relief to exporters As per the decision taken in 22nd GST council meeting regarding merchant exporters, "is t

Ankita Khetan

Oct 8, 2017

Last update on Oct 8, 2017

GST council decides to provide relief to exporters

As per the decision taken in 22nd GST council meeting regarding merchant exporters, "is to impose a nominal 0.1% GST rate for procuringgoods from domestic suppliers for exports till March 31, 2018" Mr. Jaitley said. The e-wallet system is expected to rollout from April 1, 2018.The refund of GST for the month of July will start by October 10 and for the month of August by October 18 will address the liquidity concerns of the exporters.

EXPORT PACKAGE GST

PRESS BRIEF

The GST Council under Chairmanship of Union Finance Minister Shri ArunJaitley has in its 22nd Meeting held at Delhi today approved a major relief packagefor exporters.
Mindful of the difficulties faced by exporters post-GST leading to a decline inexport performance and export competitiveness, the Council had last month set up ahigh power Committee on Exports under Revenue Secretary Shri Hasmukh Adhia torecommend suitable strategies for helping this sector. This Committee had fivesenior Government functionaries from the Centre and an equal number from theStates as members.
After wide ranging discussions with major Export Promotion Councilsincluding FIEO, AEPC, GJEPC, EEPC, CLE, CHEMEXIL, PARMAEXCIL andHandicrafts EPC etc. and interacting with all stakeholders the Committee presentedits recommendations to the Council today.
The Council identified the major difficulties constraining the export sector areon account of delays in refunds of IGST and input taxes on exports and workingcapital blockage as exporters have to upfront pay GST on inputs and capital goodsfor export production or for procuring goods for export. Another difficulty was that theduty credit scrips such as MEIS was losing value due to its reduced usability as itcould no longer be used to pay IGST / GST.
The Council was unanimous that it is in the national interest to take allpossible measures to support the exporting community, which earns valuable foreignexchange and provides significant employment especially in the small and mediumsector. Accordingly, the Council approved the following package of relief andincentives for exporters with immediate affect:
1. Within the next 4 days i.e. by 10.10.2017 the held-up refund of IGST paid ongoods exported outside India in July would begin to be paid. The Augustbacklog would get cleared from 18.10.2017 and refunds for subsequent monthswould be handled expeditiously. Other refunds of IGST paid on supplies toSEZs and of inputs taxes on exports under Bond/LUT, shall be processed from18.10.2017 onwards. For this, the Council agreed to suitably empower Centraland State GST officers so that exporters get refunds from one authority only.Related matters of settlement of funds are being resolved.
2. To prevent cash blockage of exporters due to upfront payment of GST oninputs etc. the Council approved two proposals, one for immediate relief andthe other for providing long term support to exporters. Immediate relief is beinggiven by extending the Advance Authorization (AA)/Export Promotion CapitalGoods (EPCG)/100% EOU schemes to sourcing inputs etc. from abroad aswell as domestic suppliers. Holders of AA/EPCG and EOUs would not have topay IGST, Cess etc. on imports. Also, domestic supplies to holders of AA/EPCG and EOUs would be treated as deemed exports under Section 147 of CGST/ SGST Act and refund of tax paid on such supplies given to the supplier.
3. Merchant exporters will now have to pay nominal GST of 0.1% for procuringgoods from domestic suppliers for export. The details would be released soon.
4. The permanent solution to cash blockage is that of "e-Wallet" which would becredited with a notional amount as if it is an advance refund. This credit wouldbe used to pay IGST, GST etc. The details of this facility would be worked outsoon. The Council desired that the e-Wallet solution should be madeoperational w.e.f. 1st April 2018.
5. Exporters have been exempted from furnishing Bond and Bank Guaranteewhen they clear goods for export.
6. Specified banks and Public Sector Units (PSUs) are being allowed to importGold without payment of IGST. This can then be supplied to exporters as per a scheme similar to Advance Authorization.
7. To restore the lost incentive on sale of duty credit scrips, the GST on sale purchaseof these scrips is being reduced from 5% to 0%.
8. GST on bunker fuel is being reduced to 5% for both coastal vessels and foreigngoing vessels. This will boost coastal shipping. It will also improve India'scompetitiveness.
The Council is confident that these measures would provide immediate reliefto the export sector and enhance export competitiveness of India. The Council alsodecided to continue to monitor the situation closely so that going forward all requiredsupport continues to be extended to this important sector.