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The GST council had a meet yesterday in Hyderabad, where the rate of tax on goods that have been procured for export purposes has been made 0.1%. Also, the merchant exporters will be charged 0.1% tax.
The released official statement told that for cutting down the cash blockage exporters were facing because the payment of GST had to be done for inputs, the Council accepted two proposals. The statement said “One for immediate relief and the other for providing long-term support to exporters. Immediate relief is being given by extending the advance authorization (AA)/ Export Promotion Capital Goods (EPCG)/100 per cent EOU schemes to sourcing inputs from abroad as well as domestic suppliers.” The statement also told that the holders of AA/ EPCG and EOUs will not be liable to pay IGST and cess on imports. “Also, domestic supplies to holders of AA / EPCG and EOUs would be treated as deemed exports…and refund of tax paid on such supplies given to the supplier.”
Also, some specified banks and Public Sector Units will be permitted to import gold without payment of IGST. “This can then be supplied to exporters as per a scheme similar to AA,” the statement added.
Exporters body Federation of Indian Export Organisations (FIEO) appreciated this move as the merchant exporters contribute to more than 30% of country’s exports and have small margins between to 2 to 4 %. GST levy, particularly in the case of products with higher rates, had totally shaken the exporters’ costing because they had to pay the tax and then seek a refund after some time gap, FIEO stated.
The E-wallet facility is being planned to be available from 1st April so as to provide more liquidity to the exporters. The Directorate General of Foreign Trade (DGFT) will prepare norms for the proper functioning of the e-wallet. FIEO had stated before that micro and small exporters are burdened by GST in particular as to pay taxes they are forced to borrow money to pay the taxes. FIEO had requested the government to consider providing e-wallet to the exporters to help them from getting impacted by the cost of getting credit for payment of taxes.
The statement tells that under the e-wallet keeping preceding year’s exports in consideration, an average GST rate will be calculated and e-currency will be credited to exporter’s account. It will function as a running account where money may be taken from the e-wallet when duty paid supplies have to be procured and the amount may be credited back when the export proof is provided, it said.