Indian exporters seek Goods and Services Tax extension on export ocean freight

Indian exporters have sought an extension of previously granted exemption from Goods and Services Tax (GST) on export freight. In a letter to finance minister Nirmala Sitharaman this weekend, the Federation of Indian Export Organisations (FIEO) said that overseas freights have increased 300-350% from pre-Covid level and refund of GST through Input Tax Credit comes with a lag of 2-3 months, which affects cash flows.

The exemption from GST on export freight ended on September 30, so now exporters will have to pay 18% GST on export ocean freight. India’s goods exports slowed to 1.62% in August and the trade deficit more than doubled to $27.98 billion from the year-ago period. Imports rose 37.28% to $61.9 billion in August this year.

The exemption from GST on export freight was extended twice after it was introduced in 2018 and the last extension ended on September 30 after a two-year run. As per the organisation, the payment of GST on export freight and subsequent refund particularly through ITC mechanism comes with a time lag of generally 2-3 months or so, though refund through IGST mechanism is a faster move and that will affect India’s agriculture exports the most.

Source: economictimes.indiatimes.com


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