NEW DELHI: The Central Government would like the Goods and Services Tax (GST) Council, slated to meet later this month, to address the distress in India’s export sector on account of the US withdrawing preferential trade terms and an ongoing global slowdown by tweaking the GST rate on products which figure heavily in India’s export basket.
There is a strong demand, among others, for reducing GST on auto parts and some textile goods, which the Central Government is likely to support. It will also be pitching for a single authority to process GST refunds.
“The whole idea is to reduce the time for refunds. Exporters’ main grudge has been that they are constantly facing a liquidity crisis as refunds do not come on time and impatient suppliers in the global supply chain are unwilling to wait for payments, forcing Indian exporters to borrow at high costs,” said officials.
While some auto parts are currently taxed at 18 per cent, others are taxed at 28 per cent. The Automobile Component Manufacturers Association has been demanding that all auto parts be uniformly taxed at 18 per cent for some time. The auto-components industry accounts for 2.3 per cent of India’s Gross Domestic Product (GDP) and employs as many as 1.5 million people directly and indirectly each. There is also a move to reduce GST on some textile product lines which are now taxed at 18 per cent to 12 per cent, as well as on finishing agents such as dyes etc., used by the textile industry in order to help the sector which earned about $38 billion in 2018.
The centre may also make a case before the Council for the need to bring in at least some petroleum products into the GST ambit.
Officials point out that there are three categories of petroleum products: Industrial fuels such as crude oil used as industrial inputs; transportation fuels like petroleum, diesel, aviation turbine fuel and household fuels like kerosene and LPG. “The entire range of petroleum products is taxed at multiple points in the country... Central excise and state VAT are among these taxes. To top it, there is no input tax credit for the industry,” pointed out Sumit Dutt Majumder, former chairman, Central Board of Direct Taxes. “There can be a case for industrial fuels which are used as inputs being brought under GST,” he added.
High GST Rates
Currently, some auto parts are currently taxed at 18 per cent and others at 28 per cent. The Automobile Component Manufacturers Association has demanded that all auto parts be uniformly taxed at 18 per cent for some time. Meanwhile, the textile industry has been seeking a reduction in GST on some textile product lines which are now taxed at 18 per cent, as well as on finishing agents such as dyes etc., which are used by the sector which earned $38 billion in 2018
Published On : 07-06-2019
Source : New Indian Express
