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Pharmexcil seeks commerce ministry's assistance in resolving problems faced by exporters post GST
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Laxmi Yadav, Mumbai
July 28 , 2017
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The Pharmaceuticals Export Promotion Council of India (Pharmexcil) has
sought assistance of Union ministry of commerce & industry in
resolving difficulties faced by pharma exporters after the
implementation of Goods & Services Tax Act (GST) which has come into
effect from July 1, 2017.
Pharmexcil in a letter to Rita
Teaotia, secretary to department of commerce, ministry of commerce &
industry, stated that the government has withdrawn incentives given to
pharma exporters post GST. With this, varied categories of pharma
exporters viz. merchant exporters and manufacturer-exporters are
required to pay GST at various levels and then claim refund, which
entails blocking of their already scarce working capital. Due to this,
their competitive advantage has tapered off.
The export promotion
body has sought GST exemption for merchant exporters purchasing goods
from manufacturers. At present, they have to pay 18 per cent GST at the
time of purchase and then claim refund.
Merchant exports account
for a sizeable percentage (around 75 per cent) of India’s exports and
work on thin margins. Prior to implementation of GST, procurement of
goods from manufacturers by merchant exporters were carried out by
furnishing B1 Bond to the central excise authorities, wherein a running
bond account was maintained and CT1 issued against each shipment for the
value of excise duty payable and the manufacturer would release the
goods without payment of such excise duty under ARE1. Thus the merchant
exporter had to pay only for the cost of goods and nothing else by way
of taxes. Proof of Export was submitted as per the guidelines to
complete the export process, said Raghuveer Kini, executive director of
Pharmexcil.
However, upon implementation of GST there is a
provision for issue of letter of undertaking (LUT)/bond for exporters
who fulfill certain criteria as per notification no 16/2017 dated
07/07/17 but no exemption of GST at the time of purchase of goods from
the manufacturers. This provision has been a major impediment for the
merchant exporter in the pharma sector since they have to pay 18 per
cent GST at the time of purchase and then claim refund, which entails
blocking of the already scarce working capital, he said.
“With an
aim to ensure that our working capital remains unblocked so that we
have competitive advantage in pharma export, we are looking for
exemption from payment of GST at the time of purchase from the
manufacturers either by way of bond or similar provisions as prevalent
prior to GST implementation,” he opined.
Talking about
difficulties faced by the manufacturer-exporter post GST, Bhavin Mukund,
a Pharmexcil member said that pre-GST era, procurement of imported raw
materials & other inputs were totally exempted from payment of basic
customs duty (BCD), countervailing duty (CVD) and special additional
duty (SAD) against advance license/advance authorization issued by DGFT.
However, post-GST era, only BCD is exempted against advance license and
all imports are charged CVD and SAD.
We have appealed to the government to restore advance licence scheme wherein imports were exempted from all duties, he added.
The
exporters are also demanding withdrawal of GST levied on export cargo
freight by airlines. The government has exempted import cargo from GST.
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