Govt tweaks GST rates, gives relief to exporters

Quarterly filing for small businesses; ewallets from April 2018

Offering relief to small and medium enterprises (SMEs) and exporters from the rigours of complying with the technology-oriented goods and services tax (GST), the federal indirect tax body, GST Council, on Friday announced several rule changes.

The Council also lowered tax rates on 27 products and a few services and asked a panel of state ministers to examine if the 18% GST on air-conditioned restaurants could be lowered, finance minister Arun Jaitley said after the meeting.

The Council, which is headed by Jaitley, decided to continue with two pre-GST era schemes that allow duty-free sourcing of materials for export production till March 2018, a move that will improve the liquidity of exporters by preventing their working capital from getting locked up in tax procedures.

The Council decided to clear all tax refund claims of exporters for July by October 10 and for August by October 18. It introduced a 0.1% GST rate for merchant exporters, offering relief from the full applicable GST rates on their procurements. Merchant exporters do not manufacture products themselves but procure from others for shipping overseas.

The steps taken by the Council will provide urgent but temporary relief to SMEs, said VK Agarwal, former president of the Federation of Indian Small and Medium Enterprises.

Friday’s decisions will come into force over the next one week as they get notified. A system of immediate refunds is being prepared. A technology company will be hired to launch an e-wallet scheme by April 2018 with notional tax credits that exporters can use to procure goods without incurring a tax burden.

Federation of Indian Export Organizations president Ganesh Kumar Gupta said the introduction of an e-wallet will provide a permanent solution to the liquidity problem of exporters.