GST Impact: Exports on a downhill
GST Impact: Exports on a downhill
As highlighted in our previous articles, export sector has been one of the worst hit by the GST. Reason behind this is procedural flaws in export mechanism. In a bid to revive the ailing export, commerce ministry has come up with series of steps..
The impact of GST on exports of country has been so negative, that exports witnessed the worst contraction. It has been at the lowest in past 15 months.
To tackle and improve this situation, the commerce ministry has come up with number of steps like -
· A mechanism for faster refunds.
· Treating supplies to export-oriented units from the domestic tariff area (DTA) as deemed exports.
· Allowing exporters to use a scrip they get under the critical Merchandise Export from India Scheme (MEIS) to pay GST.
With the introduction of the GST, the government has permitted the use of such scrip for the payment of only the basic customs duty.
For small and medium enterprises with limited access to credit, this remains a huge challenge. MEIS is the most important export promotion scheme under which the government provides exporters duty credit
The commerce ministry is of the view that if virtual payment of GST is allowed, it will be one of the most important concessions for them.
This is because SMEs, who account for a bulk of the country’s exports, usually use working capital to pay the tax and then wait for the refunds.
Virtual payment mechanism will facilitate a system whereby the exporters will pay notional duty and get notional refunds later.
These solutions, if implemented will bring the much needed relief to the exporters of country who are currently reeling under tremendous financial pressures due to GST.
