Gem & Jewellery Exporters Exempted from IGST!
No
3% IGST on supply of Gold by Nominated Agencies
Exemption Effective
from January 1, 2019
In
a major relief, the Union Government has accepted apex body - The Gem &
Jewellery Export Promotion Council’s (GJEPC’s) demand to grant IGST-related
exemption on supply of gold by Nominated Agencies to exporters of articles of
gold. The GST Council recently announced that gem & jewellery exporters
will no longer have to pay 3% IGST to nominated agencies (banks) from 1st
January 2019.
Mr.
Pramod Kumar Agrawal, Chairman, GJEPC, said, “We commend this step undertaken
by the Government. On recommendations of the Council, the GST Council ruled
that it was satisfied and it is necessary in public interest to exempt the
intra-State supply of gold falling in heading 7108 of the First Schedule to the
Customs Tariff Act, 1975 (51 of 1975), when supplied by Nominated Agency under
the scheme for "Export Against Supply by Nominated Agency.” We are also
expecting a similar relief from Govt. to the exporters of articles of silver
& platinum very soon.
Mr.
Agarwal added, “The upfront payment of IGST and Import duty in the form of bank
guarantee had further led to the huge working capital blockage for various
small and medium jewellery exporters, increased interest cost, hassles of
compliance to claim refund thus consequently impacting their business
operations & global competitiveness.”
Post
implementation of GST Regime and 3% IGST on gold, the industry had requested
for the IGST exemption on supply of gold by nominated agencies to exporters.
Thereafter, the Government of India vide Notification No. 77/2017-Customs dated
13.10.2017 had exempted specified banks and Public Sector Units (Nominated
Agencies) from payment of IGST on import of gold but the same had not
benefitted the jewellery exporters as they still had to bear the upfront
payment of IGST/GST and the basic import duty to the tune of 10% on procurement
of gold for the purpose of manufacture of export of jewellery.
GJEPC
is also pursuing key pending GST Issues …
1. With respect to the blockage of
input tax credit (‘ITC’) due to inverted duty rate structure.
Effective
25th January 2018, the GST rate on cut and polished diamonds and gemstones has
been reduced from 3% to 0.25%, while GST rate of 5% (job work charges)/18%
(others) applies on input services, leading to accumulation of ITC qua domestic
supplies.
GJEPC’s
Recommendation:
Single
GST tax rate regime of 0.25% across the entire value chain for diamonds/colored
gemstones/semi-precious gemstones.
2. Exports made on consignment basis
(including for foreign exhibitions, export promotion tours etc.)
As
the goods sent on consignment basis for the purpose of foreign exhibitions,
export promotion tours is not a supply, GST should not be levied on goods
exported for such purpose or when reimported back.
GJEPC’s
recommendation: Clarification to be issued to provide with regard to exemption
for consignment import and export of gems and jewellery through
exhibition/export promotion tours.
3. Refund of accumulated tax credit on
account of inverted duty structure on input for a certain period
Refund
claims filed on account of inverted duty structure being denied, substantial
amount has been accumulated which has led to the capital blockage of the
diamond/coloured gemstone exporters.
GJEPC’s
recommendation: Necessary instructions
be issued to permit refund of accumulated ITC pertaining to stock of the stated
products held as on the date of rate change. In addition to the above issues,
GJEPC has also taken up the issue pertaining to import of gold on consignment
basis for manufacture and export of jewellery.
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