Responding to exporters’ disappointment over the changes made in the existing incentive schemes to align them with the Goods and Services Tax, the Commerce Ministry is planning to approach the GST Council to restore some of the lost benefits.

“The government had to remove most of the exemptions in the existing schemes such as advance authorisation and restrict the use of duty free scrips earned under other popular schemes as no agreement had been reached with the GST Council on retaining all benefits under the GST regime,” a government official said.

The Commerce Ministry is now planning to resume the talks and restore some of the benefits that have been taken away as exporters say it will hit their competitiveness, he added.

For instance, in the advance authorisation scheme, where exporters are now given exemption only on the basic customs duty (earlier CVD was also exempted), the Commerce Ministry will try and convince the GST Council to extend exemption on the GST component as well.

“There are countries such as the EU, South Korea, South Africa and Australia that provide exemption on GST and VAT. We could also find a way around it,” the official said.

Extending validity period

Attempts are also on to extend the validity period for using the duty free scrips that are given under the Merchandise Export from India Scheme and Services Export from India Scheme as the use of the scrips has been now mostly limited to payment of basic customs duty.

“Since earlier the duty free scrips could be used to pay a host of other input duties such as CVD, excise and services tax, exporters will not be able to use the scrips as fast they earlier could use them. They should therefore be given more time for its utilisation,” the official said.

The Commerce Ministry will also get clarity on whether the sale of the scrips can be exempt from tax by classifying them as security.

“If not, then the scrips should attract the low slab of 5 per cent,” according to exporters’ body FIEO.

In a meeting with Commerce & Industry Minister Nirmala Sitharaman and senior government officials on Thursday, a FIEO delegation led by its President Ganesh Kumar Gupta, demanded that the government should come out soon with a clarification on which category of exporters had to provide a bond with bank guarantee for getting exemption from paying GST on exports and which category could get away with only a legal undertaking.

To sort out concerns raised by exporters, the Directorate General of Foreign Trade and the Central Bureau for Excise and Customs have appointed nodal officers, according to an official release from FIEO.

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