Heal and Deal Export Benefits – A Balancing Act of GST Council
Finally the 22nd meeting of GST Council on 6th October 2017 emerged as boon for exporters.
It is pertinent to note that the GST regime had resulted into dilution of various accrued benefits and privileges. It accordingly had effected advance licence, status of 100% EOU benefits , other schemes of duty free procurement of inputs and capital goods etc.
Whereas, the trade was demanding restoration of such basic necessity to survive in the international market.
The demand was further weighted by suggestions from Export Promotion Councils including FIEO, AEPC, GJEPC, EEPC, CLE, CHEMEXIL, PARMAEXCIL and Handicrafts EPC etc.
It can be concluded that a balanced approach of heal and deal was adopted by the GST Council to normalize the working of exporters and to ensure the inflow of foreign exchange for the exchequer.
The prominent proposals are as under :
The phase wise refund will commence as below:
Refund of July– From 10.10.2017 the held-up refund of IGST paid on goods exported outside India in July would begin to be paid.
Refund of August– The August backlog would get cleared from 18.10.2017 onwards.
Other refunds– Refund of IGST paid on supplies to SEZs and of inputs taxes on exports under Bond/LUT, shall be processed expeditiously from 18.10.2017 as well.
RELIEF AND SUPPORT
To prevent cash blockage of exporters due to upfront payment of GST on inputs etc. the Council approved two proposals:
First- Immediate Relief
i.Tax Free Procurement– Immediate relief is being given by extending the Advance Authorization (AA) / Export Promotion Capital Goods (EPCG) / 100% EOU schemes to sourcing inputs etc. from abroad as well as domestic suppliers.
Holders of AA / EPCG and EOUs would not have to pay IGST, Cess etc. on imports.
ii.Deemed Export – Domestic supplies to holders of AA / EPCG and EOUs would be treated as deemed exports under Section 147 of CGST/SGST Act.
Further, refund of tax paid on such deemed supplies will be given to the supplier.
Second-Long Term Support
i.Nominal GST– Merchant exporters will now have to pay nominal GST of 0.1% for procuring goods from domestic suppliers for export.
ii.E-wallet – The permanent solution to cash blockage is “e-Wallet”. which would be credited with a notional amount as if it is an advance refund. This credit would be used to pay IGST, GST etc. The details of this facility would be worked out soon.
The “e-Wallet” would be made operational from 1st April 2018.
What is E-wallet ?
An e-wallet will be set up for exporters. It will be operation to counter the problem arising due to no exemptions being faced by all exporters.
E-wallet is a type of electronic card which is used for transactions made. Its utility is same as a credit or debit card.
It will be given a notional amount as advance refund. And on the basis of this credit, firms can pay IGST and GST. And refunds will be offset against this.”
iii.No Bond and Bank Guarantee– Exporters have been exempted from furnishing Bond and Bank Guarantee when they clear goods for export.
iv-Import of Gold – Specified banks and Public Sector Units (PSUs) are being allowed to import Gold without payment of IGST. The imported gold can be supplied to exporters as per a scheme similar to Advance Authorization.
v.Nil GST on sale of Scrips – To restore the lost incentive on sale of duty credit scrips, the GST on sale-purchase of these scrips is being reduced from 5% to 0%.
vi.Reduced GST on bunker fuel – The applicable GST rate is being reduced to 5% for both coastal vessels and foreign going vessels. This will boost coastal shipping. It will also improve India’s competitiveness in the international market.