Address refund of embedded taxes on exports: AEPC to Govt

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Saurabh Gupta | 06 Oct, 2017
Ahead of GST Council's meeting on Friday, the apex apparel exporters body, Apparel Export Promotion Council, (AEPC) has urged the government to address the refund of embedded taxes on exports.

These embedded taxes include the levies on cotton, electricity, input tax credit restrictions for man-made fibres used in textiles and purchases made from unregistered dealers. As per an Industry representation, Middle East, South Asian and African countries have emerged as a significant market for Indian readymade garments and since lot of orders were already booked before the introduction of GST, the curtailment in duty drawback will adversely affect the exports.

The Industry has also requested for the reinstatement of the scope of transaction for MEIS scrip to facilitate the exporters to make payments of necessary duties and taxes through the scrip transactions as was permitted prior to GST regime.

Ashok G Rajani, Chairman Apparel Export Promotion Council said, "In the absence of encouraging drawback rates, exports will further witness a sharp decline just ahead of the peak festival season when the Industry was expecting a recovery. It is our humble submission to the concerned ministries to review the issue of embedded taxes and allow its refund through the drawback route. Apparel exporters have already been hit hard by an appreciating rupee and the non-refund of embedded taxes have put a tremendous pressure on their working capital. The instance of new levies like intra company stock transfers, GST on job work, etc. imposed in the GST regime have led to cost escalation for exporters in this transitory phase. So it is requested that Government look at ways to addresses the issue of reimbursement of embedded taxes presently not reimbursed under rebate of state levies and (duty) drawback schemes which would provide a respite to the Industry."

"Garment Industry is among the largest job provider in the country and in order to remain competitive in the global market among the prevailing headwinds, it is important that government keeps a sympathetic view towards the demands of the Industry and refunds un-subsumed taxes," commented Ashok Rajani,Chairman Apparel Export Promotion Council.

AEPC has been in constant consultation with Commerce and Textile ministries along with Niti Aaayog on the issue of restoration of Old duty drawback rates. The council has made a presentation to Amitabh Kant, CEO, Niti Aayog apprising him about the various issues which the garment Industry is currently grappling with.