Package of relief and incentives for exporters. The Council approved the following package of relief and incentives for exporters with immediate effect:
Expedious Refund of IGST
1. Refund of IGST paid on goods exported outside India in the month of July would began from 10.10.2017.
2. Refund of IGST paid on exported goods in month of august would get cleared from 18.10.2017.
3. Refund of inputs taxes credit on exports under Bond/LUT, shall be processed from 18.10.2017 onwards. Refund of IGST paid on supplies to SEZs shall also be processed from 18.10.2017.
4. For this, the Council agreed to suitably empower Central and State GST officers so that exporters get refunds from one authority only.
Immediate Relief to exporter to minimize cash blockage
Immediate relief is being given by extending the Advance Authorization (AA) / Export Promotion Capital Goods (EPCG) / 100% EOU schemes to sourcing inputs etc. from abroad as well as domestic suppliers without payment of IGST, Cess etc.
Now question comes to us whether SGST and CGST will be exempted or not for procurement against scrip. As per the language employed in the press release it not clear that the scrip is usable or not for SGST and CGST both. In pre GST regime scrip was usable only for central excise, service tax in case of domestic procurement but not for VAT/CST and for BCD, CVD, SAD in case of import. There was no discrimination in interstate and intra state procurement in pre GST regime from excise and service tax perspective, as same rate of tax with same nomenclature was applicable but now in GST regime, CGST and SGST will be applicable in case of intrastate and IGST in case of interstate and Import .Now in GST regime since the scrip is now allowed for domestic procurement as well import, hence it is expected that the scrip will be usable for both the component of GST in case of intra state supply i.e. CGST and SGST and for IGST in case of interstate procumbent or import in order to avoid discrimination of procurement between intra state/interstate and Import.BCD is already exempted for procurement against scrip in pre GST as well in Post GST.
Domestic supplies to holders of AA / EPCG and EOUs would be treated as deemed exports under Section 147 of CGST/SGST Act and refund of tax paid on such supplies given to the supplier.
This Para of press release lead to lot of confusion that the supplies to Holder of AA/EPCG/EOU regarded as deemed export, and refund will be available to the supplier. Since the Para use the word refund, which indicates that there will be no upfront exemption rather there will be refund in case of supplies against scrip, means pay first and refund back. Further the third proviso of the rule 89 of the CGST rules allowed refund in case of deemed drawback to the recipient, but the press release use the word supplier is entitled for refund.
Merchant exporters will now have to pay nominal GST of 0.1% for procuring goods from domestic suppliers for export.
In pre GST regime there was concept of CT-2, form H etc. for procurement by the merchant exporter, now in GST regime concept of all these form is abolished and now nominal GST @0.1% will be payable on procurement. Hence manufacturer exporter will avail the facility of EPCG/AA/EOU and merchant exporter will avail the facility of nominal rate of GST. Detail notification is expected soon to clarify, how to correlate the procurement at nominal rate with export and what kind of record to be kept by the merchant exporter.
Permanent relief to reduce cash blockage
- The permanent solution to cash blockage is that of "e-Wallet" which would be credited with a notional amount as if it is an advance refund. This credit would be used to pay IGST, GST etc. The details of this facility would be worked out soon. The Council desired that the “e-Wallet” solution should be made operational w.e.f. 1st April 2018.
This facility will be drawn taking into consideration WTO agreement, this scheme must be WTO compatible,
- Exporters have been exempted from furnishing Bond and Bank Guarantee when they clear goods for export.
- The GST rate on sale-purchase of these scrips is being reduced from 5% to 0%.
This will improve the rate of MEIS/SEIS scrip in market which was negotiated in market at 88% to 90% due to levy of GST, now hope market rate will increase to 95 to 98% i.e. there will be additional flow in of cash ranging from 7 to 8%, which will be beneficial for exporter.
- GST on bunker fuel is being reduced to 5% for both coastal vessels and foreign going vessels