Exporters’ Body Airs Concern Over ‘Inadequate’ Budget Allocation
Gantry cranes operated by PSA International Pte stand at the Jawaharlal Nehru Port. Photographer: Dhiraj Singh/Bloomberg  

Exporters’ Body Airs Concern Over ‘Inadequate’ Budget Allocation

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Exporters on Wednesday expressed concern over the “grossly inadequate” budget allocation to the tax refund scheme and disallowing Integrated Goods and Services Tax refunds, saying that these might adversely affect overall exports.

The government had approved the Remission of Duties and Taxes on Exported Products scheme in March last year for reimbursement of taxes and duties to exporters, with a view to giving a boost to the country’s dwindling outbound shipments.

“The budget allocation is just Rs 13,000 crore for the RoDTEP scheme which is grossly inadequate. This amount should have been around Rs 50,000 crore,” Federation of Indian Export Organisations Chairman (East) Sushil Patwari told PTI.

The rates for the new scheme have not been announced by the government, but as the allocation is not adequate, it appears that the benefits will be much less than what exporters used to get from the previous Merchandise Exports from India Scheme, he said.

“And it may have an impact on the competitiveness of exporters and overall exports,” Patwari said.

Any further delay in announcing rates for RoDTEP will have serious implications for future exports as exporters are in “wait and watch mood” before finalising new contracts particularly in sectors having thin margins, FIEO President Sharad Kumar Saraf had said on Jan. 29.

RoDTEP replaces the existing MEIS and it aims at reimbursing taxes and duties incurred by exporters such as local taxes, coal cess, mandi tax, electricity duties and the fuel used for transportation, which are not getting exempted or refunded under any other means.

Moreover, exporters said, they will no longer be allowed Integrated GST refunds and will have to go through the Input Tax Credit process which is a major setback for the industry reeling under crisis.

“Exporters are no longer eligible for IGST refunds and they have to go through the ITC refund process. The GST Council will allow class of persons and class of goods and services to be eligible for IGST refund. (It is a) huge issue for exporters,” FIEO Director-General and Chief Executive Ajay Sahai said.

Also read: Budget 2021: Key Changes In GST To Help Small And Medium-Sized Businesses

Exporters said that unless the matter is reconsidered, their working capital requirement will jump.

IGST refunds are issued to exporters automatically within a fortnight after filing of returns without any manual intervention. But, ITC is claimed only after paying tax and the process for refund is complex compared to IGST mechanism, they said.

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