Exporters fear liquidity issues as refunds could take time post GST

Posted by Daily Shipping Times on 03-04-2017        Tweet

NEW DELHI: Despite the Government’s assurance that refund of Goods and Services Tax (GST) to exporters will happen smoothly and on time, exporters are apprehensive that their liquidity will get hit and costs would go up once the regime is in place in three months time.

The main problem stems from the fact that there is no exemption under GST for exporters or a clear cut time-line on its refund.

“We know how long it takes to get refunds, especially from State Governments. There is no reason for us to expect things to change under GST,” said Mr. Tilakraj Manaktala, an exporter of home furnishings and a member of the Delhi Exporters Association.

Smooth flow of goods

The GST regime, that promises to smoothen flow of goods and services across the Country by replacing multiple indirect taxes with a single tax (five slabs including zero duty) at the Central (Central GST), State (State GST) and inter-State (integrated GST) levels, is likely to be implemented from July 1.

“The drawback money is an assured source of duty refund for exporters. This unfortunately will reduce while there is no certainty on when and how much will get refunded under GST,” Mr. Manaktala said, adding that the DEA has been pushing the Government for exemption.

While at present exporters are exempt from payment of additional customs duty and excise on imports of inputs used in exports, both will get subsumed in GST and will be no longer eligible for exemption. “As per a study that we had done, costs for exporters could go up by up to 1.25 per cent (FOB value) once the GST is implemented,” said Mr. Ajay Sahai from the Federation of Indian Export Organisations.