In an effort to streamline the export process and address long-standing issues, the Commerce Department has committed to addressing the GST-related problems plaguing exporters. This proactive move aims to tackle compliance hurdles, expedite refunds, and simplify audits, ensuring exporters can focus on their primary business objectives.
Exporters have raised alarms over a spate of show-cause notices from GST authorities. These notices, often triggered either suo moto or based on audit objections, demand GST payments on overseas bank charges. This situation persists despite a prior consensus by the GST Council that such charges should be borne by Indian banks.
Red Tape and Red Sea: A Dual Crisis
Compounding these issues, the Red Sea crisis has disrupted shipments, causing delays that further complicate the 90-day deadline for EGM filing when exporters procure goods at a 0.1% concessional GST rate. Exporters are now urging for an extension beyond this 90-day period to accommodate the shipping delays.
A source revealed, “The Commerce Department has solicited feedback from various export bodies regarding their GST challenges. This feedback will be analyzed and presented to the GST Council and Finance Ministry for swift resolution.”
The Federation of Indian Export Organisations (FIEO) has independently approached Finance Minister Nirmala Sitharaman, highlighting the myriad problems under the GST regime and requesting solutions.
Clarification on Bank Charges
The issue of GST on overseas bank charges has been a point of contention. In a GST Council meeting in June 2022, it was decided that Indian banks, as the service recipients, should discharge the IGST, allowing them to utilize input tax credit (ITC) to offset the tax liability. This was echoed by the Fitment Committee, which clarified that domestic banks could avail ITC on tax paid via reverse charge.
The FIEO has urged the Finance Minister to instruct the Central Board of Indirect Taxes and Customs (CBIC) to clarify this to the GST authorities, to halt the issuance of unwarranted show-cause notices.
Extension for EGM Filing
Exporters, particularly affected by the shipping delays due to the Red Sea crisis, are struggling to adhere to the 90-day timeframe for export and EGM filing. They have requested an extension of an additional 60-90 days, on a case-by-case basis, to facilitate compliance despite logistical challenges.
In summary, the Commerce Department’s initiative to engage with the GST Council and Finance Ministry marks a significant step towards alleviating the burdens faced by exporters. By addressing compliance issues, facilitating refunds, and simplifying audits, the department aims to create a more conducive environment for exporters to thrive amidst global challenges.
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