GST levy on job work striking carpet and apparel industry: FIEO

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Saurabh Gupta | 02 Sep, 2017
Carpet and apparel sectors are feeling the stress, especially because of the GST levy on job work, which translates into a higher tax incidence, informed Ganesh Kumar Gupta, President, Federation of Indian Export Organisations (FIEO) on Friday.

Gupta, however, hoped that GST will help this industry in the long run to get more competitive in both the global and domestic markets and create opportunities for sustainable, long-term growth.

The GST council has levied 5 percent GST on job work in textile sector such as cutting, embroidery, finishing, washing or pressing, packing, bleaching, dyeing, printing, knitting, and colouring. Earlier, there was no tax for these works.

Gupta was addressing a seminar on "Implication of GST & Foreign Trade Policy" organized by FIEO a premier export promotion organization jointly with Exim Bank of India, Eastern UP Exporters Association (EUPEA)& State Bank of India in Varanasi.

The FIEO Chief said that the event focuses on educating exporters of this extremely important Varanasi Region, which holds India's thriving textile industry, on issues relating GST.

The FIEO Chief also informed that FIEO's proposal to the Government for introduction of e-wallet for exporters is under consideration and if it is accepted the problem of liquidity will be solved as exporters may use it like a running account where money will be debited from e-wallet when duty paid supplies have to be undertaken and the amount is credited when the proof of exports is made available. Appreciating the Government's support in addressing various issues of exporters taken up by him, G K Gupta advised the exporters to assess the challenges which they have come across during the last two months at ground level.

Speaking on the occasion Dr Ajay Sahai, Director General & CEO, FIEO said that while he appreciate the problem of liquidity under the GST Regime, on logistic part lot of improvements are expected.

Dr Sahai also informed that a request has already been made to the authorities either to put zero GST Rate on sale/ transfer of scrips or put it at 5%, hoping that GST Council may consider it.

As regard cases of embedded tax on supplies, he appraised that the issue has already been referred to the Drawback Committee to look into such cases and provide a refund of duties through Duty Drawback mechanism. He advised the exporters to do their own calculations before opting for higher drawback rates as in certain cases the lower drawback rates with refund of IGST benefits or ITC refund or CGST/IGST may be more than higher drawback rates.

Earlier, addressing the Seminar Vasudhara Sinha, IAS, Additional Director General of Foreign Trade, said that GST is a well needed reform and any transition have its difficulties and need some adjustments.

"We should take a positive approach towards this transition. She further stated that the FTP Schemers will keep using to respond to the needs of the EXIM Community with some changes," she added.