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Duty drawback scheme to continue under GST
Date: 03/07/2017

In a major relief to exporters, the government has announced that the duty drawback scheme would continue under GST (Goods and Services Tax). "Drawback scheme continues under GST. Existing rates of drawback to continue with minor changes for three months (1.7.17-30.9.17)," the Central Board of Excise and Customs (CBEC) has said. Exporters have been urging the government to continue the benefits available through the duty drawback scheme. For instance, garment exporters get a duty drawback of 7.7% for knitted garments subject to price ceilings. For cotton knitted garments, the ceiling has been fixed at Rs 26.8 per kg. The union minister of state for commerce and industry, Nirmala Sitharaman, assured industry captains during her visit to the city last week that "drawback (benefits) shouldn't be a problem". But to avail duty drawback benefits exporters should not claim input credit under GST, said Raja M Shanmugham, president, Tirupur Exporters' Association (TEA). "We would make a presentation to the commerce ministry on duty drawback after a month by calculating the impact of input tax credit and other benefits under GST," said Prabhu Dhamodaran, secretary, Indian Texpreneurs' Federation (ITF). "Despite the rollout of GST, there are several blocked input taxes such as on transport fuels, electricity, stamp duties on immovable property, taxation from composition and unregistered dealer inputs," Shanmugham said. "Duty drawback scheme at its present shape is a well settled scheme seamlessly reimbursing the tax incidence on input and input services," he stated. "Also, there is likely to be a substantial blockage of working capital due to probable delay in getting the refunds," the TEA president said. Moreover, job workers, who are the nerve centre for export trade of Tirupur, are being subjected to taxes for the first time, he pointed out. He urged the government to continue with the current duty drawback rates post implementation of GST for at least two years to ensure that there "is no disruption in exports and the transition jolt is minimised."

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