BHUBANESWAR: Margins of seafood exporters are likely to take a hit as the sale of duty credit scrips will now attract a hefty 12 per cent goods and services tax (GST) compared with a four per cent VAT (value added tax) or a two per cent CST (central sales tax) levied earlier.
The duty credit scrips are granted as rewards to exporters under the Merchandise Exports from India Scheme (MEIS), introduced in the Foreign Trade Policy 2015-20, and the Service Exports from India Scheme (SEIS) and are adjusted against duties payable to the Government. However, if exporters are unable to use the scrips they can sell the same to importers as these are freely transferable.
“Earlier, the sale of scrips under MEIS used to attract a four per cent VAT or two per cent CST. Now, the sale of incentives given on free-on-board (FOB) value of exports in the form of licence would attract a 12 per cent GST," an official of a large exporting company said, adding it is a big blow for seafood exporters. The exporters are yet to come out with the exact loss figures after the roll-out of the GST.
“The exporting industry associations are facing a lot of problems and have written to the Commerce Ministry for a continuation of the existing pattern. The Ministry is believed to have written to the GST Council to take up the matter in its next meeting," said Ajay Dash, Regional President (Odisha), Seafood Exporters Association of India.
Earlier, the licence value was adjusted by importers against the customs duty, payments of excise duties and payments of service tax. Under the GST, it will be adjusted against the basic Customs Duty, leading to a reduction in demand for the scrips.
“Exporters are already operating at a thin margin. Net realisation of sale of scrips has come down to about 87 per cent, from 97 per cent earlier. The GST provisions are a further discouragement for exporters," said Gorachand Mohanty, Managing Director cum Chief Executive Officer of Seagold Overseas.