GST Extension On Export Ocean Freight Lauded
The exporters have asked for an extension of the previously granted exemption from Goods and Services Tax (GST) on export freight
The exporters have asked for an extension of the previously granted exemption from Goods and Services Tax (GST) on export freight. The reason cited is that the non-extension will add to the liquidity challenges being faced by the exporters. This was addressed in a letter to finance minister Nirmala Sitharaman recently.
The Federation of Indian Export Organisations (FIEO) wrote in the letter that the overseas freights had increased 300-350 per cent from pre-Covid level and that the refund of GST through Input Tax Credit comes with a lag of 2-3 months. This in turn affects the cash flows. The GST exemption on export freight ended on 30 September, after which the exporters would have to pay 18 per cent GST on export ocean freight.
In a public statement, the FIEO stated, “The global trade is entering into a very difficult phase as countries are facing high inflation and impending recession affecting the demand. The rate of growth in exports is also coming down as can be seen in the export growth rate from April-August,2022. Non-extension of notification has caused panic and uncertainty adding to the liquidity challenges of the exporters” FIEO said.
The goods exports had recorded a reduction in growth to 1.62 per cent in August and the trade deficit rose to more than double and reached 27.98 billion dollars from the year-ago period. The imports too, rose 37.28 per cent to 61.9 billion dollars in August this year. The apex body of the exporters also mentioned that due to the cost of credit for the exporters being much high, an exemption would help the export sector to have better liquidity.
