NEW DELHI : Passenger vehicle exports from India have run into a goods and services tax (GST) speed breaker as manufacturers have been unable to file claims since July and the pending sum has crossed over Rs 1,000 crore. Industry players said as the current GST system of making payments upfront and claiming input tax credit refund is not functioning properly, the working capital requirement for companies have increased and they could rethink on exports till the issues stay unresolved.
Moreover, Ford India CFO David Schock told that the quantum of cash needed to meet compensation cess of 1-22 per cent under GST from 1-4 per cent as existed earlier has been a "steep increase".
Elaborating on issues faced by automobile exporters, Society of Indian Automobile Manufacturers (SIAM) Deputy Director General Sugato Sen said, "Companies which are exported-oriented are suffering because the current GST system of making payments upfront and claiming the refund is not working properly."
It is leading to accumulation of GST credit, which is hurting the exporters, he added.
"There are companies whose refund has gone up to hundreds of crores of rupees. It has led to an increase in the working capital requirements of the companies, which has made them cautious in exports," Sen said.
In the July-October period, passenger vehicle exports declined by 14.45 per cent to 2,35,933 units as compared with 2,75,789 units in the same period of last year.