IGST exemption for EOUs, Software Technology Parks extended till March 31 : 26-09-2018

India has extended the exemption of integrated goods and services tax for export-oriented units (EOUs) and software technologyNSE 0.00 % parks on imported goods till March 31, 2019. This exemption was available till October 1.

The move would benefit major IT companies such as Infosys, Wipro, TCS, Genpact, Cognizant and IBM. The government is working on an e-wallet scheme to issue expeditious refunds to exporters, which, it seems, will take time. Pending that, the government has extended the exemption.

A notification extending the IGST and compensation cess exemption has been issued by the Central Board of Indirect Taxes and Customs (CBIC).

Concerned about the depreciation of the rupee and keen to boost inflows to address the rising current account deficit forecast to expand to about 2.8% of GDP in current fiscal from 1.9% in FY18, the government does not want export sector to encounter any uncertainty.

Finance Minister Arun Jaitley said the government is looking at measures to boost exports.

Prior to introduction of GST, imports of goods by export oriented units and software technology parks did not pay customs duty or special additional duty.

The government wanted to remove the exemption with the roll out of GST, which replaced multiple state and central taxes, and impose IGST on these imports with a provision for a refund.

The exemption was removed from July 1, 2017, coinciding with the roll out of the new levy, but was brought again from October 13, 2017 till April 2018, after complaints of blockage of refunds from exporters.

Subsequently, the exemption was extended till October 1, 2018 with expectations that e-wallet scheme would be put in place by then, replacing the upfront exemption. However, it seems that it will take more time and hence the exemption has now been extended till end of the financial year 2018-19. Tax experts said the government must avoid cash flow issues for exporters.

“From a policy standpoint, it’s better to avoid cash flow issues for exporters by having large amount stuck in tax refunds, which impacts their competitiveness and efficiency,” said Pratik Jain, national indirect taxes leader, PwC

Jain said the government needs to revisit if the e-wallet scheme to be introduced after the exemption is over or exemption needs to be permanently restored, in line with the practice in pre-GST regime.

Source : Economic Times

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