GST Council extends tax exemptions for exporters for six months

The GST Council at its 26th meeting in New Delhi on Saturday, decided to extend the available tax exemptions on imported goods for a further six months beyond 31 March.

Thus, exporters presently availing various export promotion schemes can now continue to avail such exemptions on their imports upto 1 October 2018, by which time an e-Wallet scheme is expected to be in place to continue the benefits in future.

In a related development, the Council reviewed the progress in grant of refunds to exports of both IGST and Input Tax Credit.  It has directed GSTN to expeditiously forward the balance refund claims to the customs / central GST / state GST authorities,  for their immediate sanction and disbursal.

It may be recalled that in its meeting held on 6 October 2017, the Council had noted that exporters are experiencing difficulties of cash blockage on account of having to upfront pay GST / IGST on the inputs, raw materials, / finished goods imported / procured for exports.

An interim solution was found by re-introducing the pre-GST tax exemptions on such imports. Additionally, for merchant exporters a special scheme of payment of GST at 0.1 per cent on their procured goods was introduced.

Moreover, domestic procurement made under Advance Authorization, EPCG and EOU schemes were recognized as 'deemed exports' with flexibility for either the suppliers or the exporters being able to claim a refund of GST / IGST paid on them. All these were made available upto 31 March 2018.

The permanent solution agreed to by the council was to introduce an e-Wallet scheme from 1 April. The e-Wallet scheme is basically the creation of electronic e-Wallets, which would be credited with notional or virtual currency by the DGFT. This notional / virtual currency would be used by the exporters to make the payment of GST / IGST on the goods imported / procured by them so their funds are not blocked.

On 16 Decembrer 2017, the finance secretary constituted a Working Group with representatives of central and state governments to operationalise the e-Wallet scheme.

After reviewing the progress, the Council noted that whereas some preparatory work had been done, more needs to be done to address a large number of technical, legal and administrative issues that have been identified.

The Council appreciated that this would require more time. The Council was also unanimous that there should be no disruption that may affect the exports. Accordingly, the Council agreed to:

(a) Defer the implementation of the e-Wallet scheme by six months up to 1 October 2018; and

(b) Extend the present dispensation in terms of exemptions, etc, which were available up to 31 March 2018, for a further six months upto 1 October.