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GST drawback scheme likely from Oct 1 to boost exports, SME exporters to benefit

GST drawback scheme likely from Oct 1 to boost exports, SME exporters to benefit

The Government may soon roll out duty drawback on goods and services tax (GST) to benefit small and medium exporters as fault lines increasingly surfaced in India's exports despite high growth in May and June this year.

This rollout is expected from October 1, along with an e-wallet scheme, as job creating exports sectors such as leather, handicrafts, handlooms, carpets, textiles and gem and jewellery have continued to decline despite merchandise exports clocking 20% growth in May and nearly 18% in June this year.

Ganesh Kumar Gupta, President, Federation of Indian Export Organisations, said a three-member committee headed by G K Pillai, Former Home Secretary and is working out the GST duty drawback rates and is expected to submit its report in the next few weeks. After vetting, the Government is likely to roll them out out by October 1.

Gupta said e-wallet scheme too is expected to be announced by October 1.

Earlier duty drawback, a popular scheme to refund taxes like excise, customs and countervailing duties paid on intermediary items for exports, was withdrawn with the launch of GST on excise and countervailing duties. It was, however, continued for customs.

The large exporters may still prefer GST where one gets offset for taxes paid on intermediaries. Small exporters find it difficult and cumbersome to pay GST as it involved additional expenditure on auditing and the like.

Gupta said that high exports growth in the last couple of months was mainly due to exports of petroleum products, chemicals and pharma. As global oil prices were high, Indian petroleum exporters reaped benefits and overall exports looked impressive in dollar terms.

About 45% of India's exports are from MSME sector, which has been badly hit due to demonetization and the rollout of GST. MSME exports create jobs as well.

E-sealing of containers is a major problem for exporters in all the Indian ports, as they are yet to acquire scanners. As a result physical examination of containers is being done and this was putting a lot of exporters into difficulty and delaying shipments, Gupta said, adding, continuing with the earlier practice of physical examination by customs officials at factory site will prevent this duplication of work and delay in shipment.


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