NEW DELHI: More than a month after the government set up a cell in the commerce ministry to make exporters familiar with the recently introduced Goods and Services Tax, it is still flooded with queries, mostly related to refunds and blocking of working capital.
“We get more than 50
GST queries on Twitter every day, almost a hundred emails and phone calls at various centres,” said an official.
The main concern of exporters is working capital getting locked up due to GST. According to industry estimates, over Rs 1.85 lakh crore belonging to exporters will get stuck with the government due to GST every year. Prior to the implementation of GST, exporters used to get exemption from duties. Now, they have to pay the duty first and then seek a refund, a process that ties up a portion of their working capital with the government and pushes up manufacturing costs.
Exporters have to arrange money for inputs, manufacturing and payment of duties and taxes.
“Our members have informed us that it would be impossible for them to export in August and September as per this refund time schedule. We request the finance ministry to make GSTN (Goods and Services Tax Network) operative for processing returns and refunds,” EEPC India, the apex body for engineering exports, said in a communication to the finance and commerce ministries.
GSTN will operate a uniform interface for taxpayers and a common and shared IT infrastructure between the Centre and the states. The portal will provide an IT backbone for the smooth functioning of the GST regime so that the nation can be leveraged as one market with minimal indirect tax compliance costs.
The liquidity problem will reduce the competitiveness of exporters by 2% due to the interest burden on them, according to Ajay Sahai, director general, Federation of Indian Export Organisations. Other issues flagged include paying IGST or taking exemption under Letter of Undertaking or bond, which increases compliance costs. Integrated GST (IGST) is collected by the Centre on the interstate supply of goods and services and is also applicable to imports.
“We are in consultation with the finance ministry and have recommended some ways of resolving the issue,” the official said, adding that the government tries to resolve exporters’ queries in a day or two.
ET View: Leverage IT
The way forward is to smartly leverage information technology to digitise transactions and speed up trade facilitation. Besides, it cannot be gainsaid that GST would put paid to cascading effects of multiple taxes, reduce costs and make our exports more competitive going forward. The two main export promotion schemes, Merchandise Exports from India Scheme (MEIS) and Services Exports from India Scheme (SEIS), do need to be better aligned with the GST regime.
Source: economictimes.indiatimes.com