GST prod for trade policy review
The government plans to come out with the mid-term review of the Foreign Trade Policy (FTP) 2015-20 ahead of schedule to ensure a parallel rollout with the goods and services tax (GST) in July.
- Published 7.05.17
New Delhi, May 6: The government plans to come out with the mid-term review of the Foreign Trade Policy (FTP) 2015-20 ahead of schedule to ensure a parallel rollout with the goods and services tax (GST) in July.
"A valid suggestion has come that this mid-term review (of the FTP) should be concluded and rolled out simultaneously with GST so that the FTP and the GST are on parallel tracks," commerce & industry minister Nirmala Sitharaman told reporters after a stakeholders' meeting.
"We found merit in the suggestion that the review of the policy should be well in time to go along with the roll-out of the GST. It means I have to announce it well in time for July 1," she said.
The review was earlier expected in September.
There were two specific concerns expressed by the exporters on the indirect tax reform. Sitharaman said her ministry would facilitate a meeting between the exporters and revenue secretary Hasmukh Adhia to clear their doubts.
The first concern is over the process of getting refunds. According to GST norms, 90 per cent of the refund will be given within seven days and the remaining 10 per cent in 4-5 months. Small and medium exporters expressed concerns that their funds could remain locked for a long time.
"Exporters, especially those in the small and medium sector, are apprehensive that it will lead to the locking up of their capital and would affect their business," the minister said.
The second concern is regarding input credits for tax-exempted goods that are used as inputs for export items.
Giving an example of agriculture products, the minister said an exporter will not get input tax credit for commodities under the exempt list of GST.
"In other words, product which do not have tax on them will have nothing to credit when it is being used as input for manufacturing or value adding it and then exporting it. So, the credit which is due for that import, which is tax-exempted, will not be given to an exporter," Sitharaman explained.
"It could mean that exporters won't get input credits for such tax-exempted items. This would go against their interest. We want the GST council to look into the problem and address it," she added.
"The last meeting of the GST council before the roll-out is likely to be around May 18-19. The group will seek time from the GST Council and talk about these two issues so that the concerns of exporters are taken care of," she said.
The two specific concerns will be taken up by a panel of senior officials, comprising former commerce secretary G. K. Pillai, commerce secretary Rita Teaotia and DGFT Ajay Bhalla, directly with the council.
During the meeting, suggestions were also made to explore the option of rupee-denominated trade, especially in Southeast Asia and West Asia. Suggestions were also made that the trade policy should not only focus on exports but also imports.
The five-year FTP (2015-20) had set an ambitious target of $900 billion of exports, including services. But this may be tough to achieve, given the slowdown in global trade over the last three years.
The current global economic and geopolitical situation has sparked concerns over international trade. Sitharaman, however, said stakeholders were not talking in terms of reviewing the target but looking at various ways to achieve it.