New Delhi [India]: Sending a strong positive signal to the exporting community, the Goods and Services Tax (GST) Council on Saturday decided to extend the available tax exemptions on the imported goods for further six months beyond March 31.
Exporters presently availing various export promotion schemes can now continue to avail such exemptions on their imports upto October 1, by which time an e-wallet scheme is expected to be in place to continue the benefits in future.
In a related development which would further benefit the exporters, the council also reviewed the progress in grant of refunds to exports of both Integrated Goods and Service Tax (IGST) and Input Tax Credit.
The council appreciated that the pace of grant of IGST refund has picked up.
Thereafter, it directed Goods and Services Tax Network (GSTN) to expeditiously forward the balance refund claims to Customs/Central GST/State GST authorities, as it may be, for their immediate sanction and disbursal.
Earlier, in its meeting held on October 6, 2017 the council had noted that exporters are experiencing difficulties of cash blockage on account of having to upfront pay GST/IGST on the inputs, raw materials, among other things.
An interim solution was found by re-introducing the pre-GST tax exemptions on such imports.
Additionally, for merchant exporters a special scheme of payment of GST at the rate of 0.1 percent on their procured goods was introduced.
Also, domestic procurement made under Advance Authorization, Export Promotion Capital Goods (EPCG) and Export Oriented Units (EOU) schemes were recognised as ‘deemed exports; with flexibility for either the suppliers or the exporters being able to claim a refund of GST/ IGST paid thereon. All these avenues were made available upto March 31, 2018.
The permanent solution agreed to by the council was to introduce an e-wallet scheme with effect from April 1, 2018.
The e-wallet scheme is basically the creation of electronic e-wallets, which would be credited with notional or virtual currency by the Directorate General of Foreign Trade (DGFT).
This virtual currency would be used by the exporters to make the payment of GST/IGST on the goods imported/procured by them so their funds are not blocked.
Earlier in December 2017, the Finance Secretary had constituted a working group with representatives of central and state governments to operationalise the e-wallet scheme.
After reviewing the progress, the council noted that whereas some preparatory work had been done, more needs to be done to address a large number of technical, legal and administrative issues that have been identified.
The Council agreed that it needs more time and was also unanimous that there should be no disruption that may affect the exports.
Accordingly, the council agreed to defer the implementation of the e-wallet scheme by six months and extend the present dispensation in terms of exemptions. (ANI)