CHENNAI: The nationwide rollout of the GST on July 1 has brought in a world of confusion to several sectors of the economy. However, the week that has passed under the new regime has already had a severe impact on exports, with many large consignments stuck in ports since exporters are unclear about what the new system requires.
According to sources in the Federation of Indian Export Organisations (FIEO) and port officials, exports have been severely crippled due to procedural issues. The impact has been grave enough to prompt both the commercial taxes department and the Central Board of Excise and Customs (CBEC) to consult exporters’ bodies and try to iron out the issues.
“One of the biggest problems is the lack of clarity over the Intergrated GST (IGST) levy on exports. Input Tax Credit is unavailable here and how to gain an exemption from IGST against bonds is unclear to us,” admitted a major exporter from Tirupur, Tamil Nadu. “I have opted to hold consignments until clarity is available,” he added.
Even with the provision of availing input tax credit, some exporter segments are likely to be hit badly. Merchant exporters, many of whom do not get any carryover of input credit are liable to be hit because even if input tax is paid on purchase and exported by furnishing a bond, their input credit is likely to be credited only at the end of the financial year.
Exporters are expected to furnish a bond or letter of undertaking (LUT) for customs officials to release export consignments. The requirement to have bonds backed by bank guarantees is also expected to play havoc with smaller exporters.
“There are also many problems with the online site where these forms will need to filed,” noted another exporter. Also affecting exports is the lack of awareness among officers on the ground about certain last-minute provisions brought in by the government to ease exporters’ problems.