Indian exporters have sought an extension of previously granted exemption from Goods and Services Tax (GST) on export freight. In a letter to finance minister Nirmala Sitharaman this weekend, the Federation of Indian Export Organisations (FIEO) said that overseas freights have increased 300-350% from pre-Covid level and refund of GST through Input Tax Credit comes with a lag of 2-3 months, which affects cash flows.
The exemption from GST on export freight ended on September 30, so now exporters will have to pay 18% GST on export ocean freight. India’s goods exports slowed to 1.62% in August and the trade deficit more than doubled to $27.98 billion from the year-ago period. Imports rose 37.28% to $61.9 billion in August this year.
The exemption from GST on export freight was extended twice after it was introduced in 2018 and the last extension ended on September 30 after a two-year run. As per the organisation, the payment of GST on export freight and subsequent refund particularly through ITC mechanism comes with a time lag of generally 2-3 months or so, though refund through IGST mechanism is a faster move and that will affect India’s agriculture exports the most.
Source: economictimes.indiatimes.com
