Government to synchroniz trade policy with GST: Commerce and industry minister Nirmala Sitharaman

Sitaraman

Commerce and industry minister Nirmala Sitharaman said on Saturday a committee set up by her ministry will take up the concerns of exporters regarding an expected increase in fund requirement under goods and services tax (GST) regime with the council headed by finance minister Arun Jaitley and comprising all states, while promising to rework the Foreign Trade Policy from July 1 to bring it in sync with the new tax regime.

After consultations with experts on the mid-term review of the five-year trade policy, the minister told reporters that a committee comprising former commerce secretary G K Pillai, who heads a committee on duty drawback, commerce secretary Rita Teaotia and DGFT A K Bhalla had been tasked with taking up the matter with GST Council, which is due to meet later this month.

Exporters as well as the commerce department are worried over the current refund process. Under the new regime, GST will have to be paid upfront and only after the shipment moves out can an exporter claim a refund. Of the total dues, 90% of the taxes are to be refunded within a week, while the remaining will come later with a provision for 6% interest on delayed payment. “Exporters, especially small and medium enterprises, will find money getting locked up,” Sitharaman said with officials adding that this will increase the working capital requirement.

The second concern relates to exempted goods such as farm products, which are used as inputs where input credit will not be available since no taxes would be paid. “The GST Council should look at the specific problems and tell us a way on how to fill it up with scrips or something,” Sitharaman said.

She said that some of the other concerns will be taken up with revenue secretary Hasmukh Adhia.
Although the consultations were on the mid-term review of the policy that is due to end in 2020, a large chunk of the discussions focused on GST that is scheduled to kick in from July and will subsume a host of indirect taxes imposed by the Centre and the states, including Union excise, state VAT, service tax and central sales tax.

The minister said that several suggestions related to the review had also been made which included recommendations to enhance the focus on services beyond software and professionals who go abroad on work visas. Experts suggested that the shift will help improve the standards for health and education. In addition, there were suggestions against focusing largely on export to also factor in the impact of import of raw material such as gems or crude oil, which are processed and exported after value addition.

Focus on SMEs through models similar to ones in Australia, Singapore and Malaysia was also proposed.

Source : TOI
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