Giving relief to exporters, the government has extended IGST (Integrated Goods and Service Tax) and compensation cess exemptions for goods procurement under certain export promotion schemes till March 2020.
These exemptions have been extended for exporters buying inputs domestically or importing for export purposes under export oriented unit (EOU) scheme, Export Promotion Capital Goods (EPCG) scheme and advance authorization.
EPCG is an export promotion scheme under which an exporter can import a certain amount of capital goods at zero duty for upgrading technology related to exports.
On the other hand, advance authorization is issued to allow duty-free import of inputs, which is physically incorporated in the export product.
The move was aimed at giving relief to exporters as they do not have to pay IGST at the initial point itself. In the GST regime, they have to pay the indirect tax and then seek a refund, which is a cumbersome process.
In a notification, the Directorate General of Foreign Trade (DGFT) has said that exemption from integrated GST and compensation cess under advance authorisation scheme, EOU, and EPCG scheme of foreign trade policy 2015-20 “is extended up to March 31, 2020”.
During April-February of the current fiscal year, exports grew 8.85 percent to USD 298.47 billion, while imports rose by 9.75 percent to USD 464 billion.
The trade deficit has widened to USD 165.52 billion during the 11 months of the current fiscal from USD 148.55 billion compared to the year-ago period.
Source: Economic Times