BURN­ING IS­SUE

GST Re­turns Blocks Busi­ness Op­por­tu­ni­ties

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The tex­tile in­dus­try has al­leged that around Rs 16 bil­lion worth of pay­ments to ready­made gar­ments alone, un­der the Re­mis­sion of State Levies (ROSL) scheme, has not been cleared by the gov­ern­ment. And, this de­lay is af­fect­ing their work­ing cap­i­tal and over­all busi­ness. The in­dus­try body rep­re­sent­ing tex­tile units has sent a let­ter to the gov­ern­ment re­quest­ing an im­me­di­ate ac­tion to clear the dues, fail­ing which hun­dreds of units would close down and lead to thou­sands of job losses in the coun­try.

Goods and ser­vices tax has a di­rect ef­fect on the ex­ports of In­dia as many of the rev­enue sub­jects are as­so­ci­ated with the in­dus­try. Af­ter the im­ple­men­ta­tion of the goods and ser­vices tax, it has been found out that the in­dus­try started get­ting rev­enue and cap­i­tal is­sue within the first month of the im­ple­men­ta­tion. The ex­port in­dus­try is fac­ing tough times right now due to non-avail­abil­ity of re­fund on time.

Now the prob­lem has elon­gated to a cer­tain level that the im­porters are now di­vert­ing their de­mands to other coun­tries for a while. Ac­cord­ing to an of­fi­cial data sur­faced re­gard­ing the ex­ports were done, which men­tioned low­est in the re­cent 8 months of sta­tis­tics cul­mi­nat­ing in July.

The tex­tile in­dus­try has al­leged that around Rs 16 bil­lion worth of pay­ments to ready­made gar­ments alone, un­der the Re­mis­sion of State Levies (ROSL) scheme, has not been cleared by the gov­ern­ment. And, this de­lay is af­fect­ing their work­ing cap­i­tal and over­all busi­ness. The in­dus­try body rep­re­sent­ing tex­tile units has sent a let­ter to the gov­ern­ment re­quest­ing an im­me­di­ate ac­tion to clear the dues, fail­ing which hun­dreds of units would close down and lead to thou­sands of job losses in the coun­try.

Ac­cord­ing to the in­dus­try, the gov­ern­ment had al­lo­cated Rs 4 bil­lion in 2016-17. The orig­i­nal al­lo­ca­tion un­der ROSL of Rs 15.55 bil­lion for 2017-18 was en­hanced to Rs 18.55 bil­lion in the re­vised es­ti­mates. For the year 2018-19, the ROSL al­lo­ca­tion in the Union Bud­get was Rs 21.64 bil­lion.

The amount al­lo­cated would not be suf­fi­cient for the re­quire­ments even at present.

Be­sides, there has been a de­lay in pay­ment; the ROSL amount was given to ex­porters only from March 2017 on­wards. The con­cern for the in­dus­try is that it has been cleared for ex­ports made only un­til May 2017, and some of the ex­port­ing units have re­ceived the ROSL amount only up to March 2017.

For the ready­made gar­ment sec­tor, the to­tal due amount is Rs 23.45 bil­lion af­ter tak­ing ac­count of the re­vised es­ti­mates of Rs 18.55 bil­lion for 2017-2018. The back­log for ready­made gar­ments be­tween Septem­ber 2016 and March 2018 would be around Rs 13.68 bil­lion, and for the Tirup­pur Knitwear Ex­ports at around Rs 3.30 bil­lion, ac­cord­ing to in­dus­try sources.

The gov­ern­ment ear­lier merged two schemes, ROSL on ex­port of gar­ments and made-ups through the mech­a­nism of re­bate un­der the scheme of re­bate of state levies on ex­port of gar­ments and made-ups. The ROSL scheme was an­nounced as part of a spe­cial pack­age to the ap­parel sec­tor, and, sub­se­quently, made-ups were also in­cluded in the scheme. The scheme came into ef­fect from Septem­ber 20, 2016. The ROSL re­bate rate ranges from 2.65 per cent to 3.9 per cent de­pend­ing on the de­scrip­tion of goods. The same ROSL re­bate rate was con­tin­ued for three months from July 1, 2017 to Septem­ber 30, 2017 af­ter the im­ple­men­ta­tion of GST on July 1, 2017. The ROSL rate was re­vised from Oc­to­ber 1, 2017; for cot­ton T-shirts, it was re­vised from 3.5 per cent to 1.7 per cent.

If a gar­ment unit with Rs. 10 crore turnover has Rs 1cr locked up in pend­ing re­fund ar­rears, which has posed a ma­jor chal­lenge. Al­most 80% of the ben­e­fit in the ap­parel pack­age an­nounced by the Cen­tre in 2016 is to­wards ROSL. Al­most 55 % of gar­ment ex­porters had not re­ceived the ROSL (Re­bate of State Levies) since last July and this amounted to al­most `2,000 crore.

With just about 30 per cent of the claims for re­funds met so far by the gov­ern­ment, Com­merce Sec­re­tary Rita Teao­tia ex­pressed her con­cern on the de­layed pay­ments at a re­cent meet­ing of the Na­tional Com­mit­tee on Trade Fa­cil­i­ta­tion, which was chaired by

the Cabi­net Sec­re­tary.

Ex­porters point out that in the ab­sence of a pre­scribed set of doc­u­ments, dif­fer­ent of­fi­cials, in­clud­ing State au­thor­i­ties, were ask­ing for what­ever doc­u­ments they fan­cied, such as bank re­al­i­sa­tion cer­tifi­cates, and were re­ject­ing claims if such doc­u­ments were not avail­able with ex­porters.

As much as `1,85,000 crore could get stuck with the gov­ern­ment be­cause of the present sys­tem, un­der which ex­porters pay du­ties first and then get re­funds, ac­cord­ing to in­dus­try es­ti­mates.

The Cen­tral Board of Ex­cise and Cus­toms has also asked its of­fi­cials to speed up work on re­funds to ex­porters. The state of In­put Tax Credit (ITC) re­fund – the money paid as GST on buy­ing of in­puts – is even worse, as ex­porters have only been able to carry out 5 per cent of the fil­ing done elec­tron­i­cally in the man­ual for­mat. Due to the non­avail­abil­ity of the re­fund mo­d­ule on the com­mon por­tal, the CBEC de­cided two months back to al­low ap­pli­ca­tions, doc­u­ments and forms per­tain­ing to re­fund claims on ac­count of in­verted duty struc­ture, deemed ex­ports and ex­cess bal­ance in elec­tronic cash ledger to be filed and pro­cessed man­u­ally.

If a gar­ment unit with Rs. 10 crore turnover has Rs 1cr locked up in pend­ing re­fund ar­rears, which has posed a ma­jor chal­lenge. Al­most 80% of the ben­e­fit in the ap­parel pack­age an­nounced by the Cen­tre in 2016 is to­wards ROSL. Al­most 55 % of gar­ment ex­porters had not re­ceived the ROSL (Re­bate of State Levies) since last July and this amounted to al­most `2,000 crore.

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