India’s largest knitwear and readymade garment exporters organisation, The Tirupur Exporters’ Association (TEA), has asked for exemption of IGST levy on imports of accessories, early clearance of accumulated input tax credits, permanent deletion of Reverse Charge Mechanism (under Section 9(4) of GST) and incentives for investments made in labour accommodation.
A TEA delegation which met Finance Minister Arun Jaitley recently, and presented him with a memorandum which stated that till June 30, 2017, apparel exporters were importing accessories such as zips and tags without any customs duty, using the Export Promotion Certificate (EPC). But post GST, imports using EPC is being subjected to IGST, however, as most accessories are taxed at 18 per cent, this tax is blocking huge working capital resulting in immense hardship to the trade.
The memo went on to note that similar problems were faced by exporters in import of capital goods under the Export Promotion Capital Goods Scheme and raw materials through the Advance Authorisation Scheme, and the Government had resolved these issues by bringing out a notification, dated October 13, which exempts imports under the two schemes from levy of IGST. TEA noted the EPC scheme which was omitted should be included.
TEA has asked for a separate notification to be issued in line with the notification exempting imports of accessories using Export Promotion Certificate from the purview of IGST. Quick release of refunds due to exporters is another issue before the FM. The original plan under the GST compliance framework was filing of GSTR 1, 2 and 3 by all taxpayers resulting in matching of tax credits, thereby facilitating release of refunds due to exporters within seven days of the claim.