AEPC urges to address embedded Taxes on Exports

AEPC urges to address embedded Taxes on Exports

The Apparel Export Promotion Council (AEPC) has urged the Indian government to address the refund of embedded taxes on exports, ahead of the GST Council’s meeting on October 6. These taxes used in textiles include the levies on cotton, electricity, and input tax credit restrictions for man-made fibres which is purchased from unregistered dealers.

Before the introduction of GST a lot of orders were already placed and because of implementation of GST on pre-booking orders will curtail in duty drawbacks and will largely effect the exports. As per industry representation, Middle East, South Asian and African countries have emerged as a significant market for Indian readymade garments. The industry further requested to facilitate the exporters to make payments of necessary duties and taxes through the Merchandise Exports from India Scheme (MEIS) scrip transactions as was permitted prior to GST regime.

“In the absence of encouraging drawback rates, exports will further witness a sharp decline just ahead of the peak festival season when the industry was expecting a recovery. It is our humble submission to the concerned ministries to review the issue of embedded taxes and allow its refund through the drawback route,” AEPC chairman Ashok G Rajani said.

Rajani said, “Apparel exporters have already been hit hard by an appreciating rupee and the non-refund of embedded taxes have put a tremendous pressure on their working capital. The instance of new levies like intra company stock transfers, GST on job work, etc imposed in the GST regime have led to cost escalation for exporters in this transitory phase.” Being the largest job providers in the country the government should keep a sympathetic view towards the demands of the industry and refunds un-subsumed taxes, he added.

AEPC has been in constant consultation with the commerce and textile ministries along with Niti Aaayog on the issue of restoration of old duty drawback rates.

Earlier this week, The Cotton Textiles Export Promotion Council (TEXPROCIL) chairman Ujwal Lahoti also urged the government to address the issue of embedded Central and state levies, which have not been subsumed under the GST regime. He said, “Trade is now witnessing a paradigm shift from an ‘exemption regime’ to a ‘refund regime’ in claiming export benefits, thereby leading to working capital and liquidity crunch.”

– Apparel and Textile News, Apparel Talk, Indian Apparel