As the Diwali festival is round the corner, the government is trying to throw some incentives to business owners. Goods and Services Tax (GST) refunds will be cleared by the end of November and over the next six months, no tax will be levied on exports, Revenue Secretary Hasmukh Adhia has said.
"For a period of 6 months, we are actually reverting back to the pre-GST scenario (where manufacturing exporters or those who manufacture goods for exports did not pay any tax. So, they have no reason for any complain now," Adhia said.
As of August 31, an estimated Rs 67,000 crore has accumulated as the Integrated GST (IGST), of which only about Rs 5,000-10,000 crore will be due as refunds to exporters, news agency PTI reported.
The revenue secretary explained that, although no tax need to be paid on goods to be exported in the remaining months of the ongoing fiscal year, from April 1. An e-wallet service will be launched that will give exporters notional credits which can be used to pay GST. The credit in the wallet would be transferable.
Under the GST regime there is no exemptions, hence, exporters are required to first pay IGST on manufactured goods and claim refunds after exporting them.
This put severe liquidity crunch, particularly on aggregators. To ease their problems, the GST Council decided a package for sourcing inputs from abroad as well as from domestic suppliers till March 31, the agency reported.
"Under GST, even a merchant exporter who collects goods from many producers and exports has to pay the full rate of duty and seek the refund. But, he is only an aggregator. So, that was the problem and it has been sorted out," Adhia said.
However, a nominal 0.1 percent tax will be levied on merchant exporters as they themselves do not manufacture.
With these measures, Adhia claimed, issues faced by exporters have been taken care of. "It's an innovative idea that we have come out with, while not compromising on GST's basic structure wherein ideally exemption should be given".
The government on Friday eased tax rules for small and medium-sized companies, now the small businesses are allowed to file tax returns once a quarter instead of every month.
