GST levied on job work, which translates into a higher tax incidence, has resulted in carpet and apparel sectors feeling stressed, Federation of Indian Export Organisations (FIEO) President Ganesh Kumar Gupta said while addressing a recent seminar. Incidentally, the GST Council has levied 5 per cent GST on job work in the textile sector such as cutting, embroidery, finishing, washing or pressing, packing, bleaching, dyeing, printing, knitting as well as colouring. Earlier, there was no tax on such job work.
Gupta said that that FIEO’s proposal to the government for introducing e-wallets for exporters is under consideration. If the proposal is accepted, liquidity problem will be solved since exporters will be able to use it like a running account where money will be debited from e-wallets when duty paid supplies have to be undertaken and the amount will be credited when the proof of exports is made available.
Speaking at the seminar, FIEO CEO & Director General Ajay Sahai said that the issue of embedded tax on supplies has already been referred to the Drawback Committee so that refund of duties could be enabled through a duty drawback mechanism. He advised exporters to do their own calculations before opting for higher drawback rates because in certain cases, lower drawback rates with refund of IGST benefits or input tax credit (ITC) refund or CGST/IGST may be more than higher drawback rates.