GST: DGFT wants GST Council to create an e-wallet facility to ease exporters fears
Exporters fear that the proposed policy of tax refund for exports under GST regime will jack up their capital costs.
Director General of Foreign Trade (DGFT) has written to the GST Council, saying that an e-wallet facility could be created for virtual payment of taxes so that the GST chain is not disrupted.
The provision for no-exemption-and-only-refund (as proposed in the model GST law) will lead to blockage of about Rs.1,85,500 crore annually for manufactured goods exporters.
However, with the latest revision, GST model law has addressed the exporters’ concern with regard to GST’s impact of special economic zones (SEZs). Imports into SEZs will continue to be exempted from both basic customs duty (which will continue in GST regime) and integrated GST (IGST), which will replace the present countervailing and special additional duties on imports.
There is however an area of concern regarding possible taxation of inter-unit transfers in SEZs.
Under the council’s proposal, manufacturer-exporters will require to pay IGST on inputs and then seek its refund. Also, merchant exporters, who source domestic goods and export, will require to pay IGST on exports and then ask for credits. Duty waiver will be available in regard to basic customs duty.
Source – The Financial Express