GST to help improve India’s exports: Sitharaman
New Delhi: Commerce Minister Nirmala Sitharaman on Saturday said the Goods and Services Tax (GST) will help improve India’s export growth.
“The way the fitment discussions have happened in the GST Council and the way commodities and services have been treated, GST is only going to help in improving our exports,” she said a briefing on three years of initiatives and achievements of the Commerce Ministry.
India’s total exports rebounded with a growth of 4.95 per cent in 2016-17 despite a negative growth in services.
Merchandise exports touched $276.5 billion and rebounded with a growth of 5.44 per cent in 2016-17 after two years of non-positive growth.
“Because of GST, exporters will benefit. Export taxation under GST is zero per cent. They will also get input credit. Taxation structure will simplify and cascading effect will be reduced. Tax incidence will be reduced. There would be simplification of taxes under GST, so good returns for exporters,” she added.
Hailing GST as a big-ticket reform, Sitharaman said that by way of input credits, the goods are going to cost less and benefit exporters.
“The smoothness with which GST has been brought about is a big ticket reform. Since the input credits have been worked out for exporters, the raw materials for any form of commodity are going to cost lesser,” she said.
Under GST, the exports are zero rated by way of refund, i.e. GST has to be paid initially but the input credit on raw materials can be claimed by way of refunds.
Sitharaman said that the ministry has been in constant dialogue with the Revenue Department and it has been arranged that 90 per cent of the advance paid money will be refunded in 6-10 days post which an interest of 6 per cent will be given for any delay.
The minister said that she has also requested the GST Council for an alternative for small and medium enterprises (SMEs) but yet to hear from them.
“Our request with the Council for refund for SMEs was of an alternative rather than asking them to pay first and then get a refund. We are yet to hear from them,” she said.
Director General of Foreign Trade (DGFT) AK Bhalla assured that the system of refund under GST will be easier.
“Whatever tax is paid with different inputs will be refunded to the exporter or can take input tax credit. This will lead to ease of refund in the whole system. We should be better off under GST,” he said at the briefing.
“The refund process for exporters has been definitely put on a fast track. While for a nomal trader under GST, the time for response to his application/query is 15 days, for a exporter it is only three days. The application/query of an exporter has to be responded within three days and he gets refund in seven days,” he added.
The GST Council on Friday announced the fitment of services and 1,211 goods in the GST tax rates, heading towards the July 1 rollout of the new indirect tax regime.
Meanwhile, at the briefing, it was disclosed that services exports contributed $160.68 billion and imports remained at $95.47 billion, leaving a surplus of $65.21 billion in 2016-17.
Total deficit (merchandise and services) reduced from $61.17 billion in 2014-15 to $40.98 billion in 2016-17.
The US was India’s top export market in 2016-17 with export reaching $42.33 billion, a growth of 4.94 per cent. It was followed by United Arab Emirates ($31.26 billion) and Hong Kong ($14.16 billion).