SMALL MEDIUM ex­porters worst hit

Perfect Sourcing - - Burning Issue -

The small and medium ex­porters have been se­verely im­pacted as there cash flow is blocked, they have lim­ited funds avail­able and now they are not able to pay to their work­ers and ven­dors also. The com­plete sup­ply chain is in mess. “In gar­ment ex­port cash flow is re­quired to make pur­chase as then only we can get into pro­duc­tion, but we are re­ally fac­ing very tough time be­cause we have not been re­funded,” said an ex­porter from Delhi.

Ac­cord­ing to the pay first-re­fund later mech­a­nism of GST, there al­ways a 20 to 30 cent block­age in every dol­lar 5 gar­ments were sold.

The work­ing cap­i­tal of ex­port in­dus­try has in­creased specif­i­cally for small and medium en­ter­prises af­ter the im­ple­men­ta­tion of Goods and Ser­vices Tax (GST). Un­der

GST, ex­porters firstly have to pay in­te­grated GST (IGST) and they are en­ti­tled to get the re­fund once goods are ex­ported. For smaller ex­porters, it is manda­tory to fur­nish the bonds and let­ter of un­der­tak­ing from the lo­cal com­mis­sioner, it cre­ates a fi­nan­cial bur­den specif­i­cally for the ex­porters.

Yet, there is no clar­i­fi­ca­tion on the re­fund mech­a­nism for ex­porters which is mak­ing the sit­u­a­tion worst. Ex­porters are en­ti­tled to get re­funds un­der GST on the tax they al­ready paid. Un­der the pre­vi­ous tax regime (VAT), the ex­porters im­ported cap­i­tal goods and raw ma­te­ri­als with­out pay­ing any du­ties, which didn’t in­flu­ence the cash flow.

The ba­sic cus­toms du­ties are ex­empted un­der GST and ex­porters are not re­quired to pay it. Since

GST func­tions on the prin­ci­ple of re­fund and not ex­emp­tions, de­lays in the re­fund process se­verely strains work­ing cap­i­tal man­age­ment of ex­porters.

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