Handicrafts exporters are facing a number of procedural problems at various ports in the entire country after the GST. Several shipments of exporters are held up for want of various clarifications from the Department of Central Board of Excise and Customs primarily on the issue of payment of GST while exporting. The intention of the Government has been very much clear from the beginning that export shall be zero-rated tax as taxes cannot be exported.
In view of the chaos amongst the exporters, an urgent open house meeting was organised by EPCH on July, 9th with senior officials of the Central Board of Excise and Customs. About 300 exporters participated in the open house. Major issues pertaining to shipment on payment of GST were discussed. Department of Central Board of Excise and customs informed the exporters about the notification/circular issued on July, 7th providing relief to exporters to export their goods on submission of letter of undertaking instead of issuing bond and depositing integrated goods and service tax. The exporters were of the view that notification is not providing full relief to them due to certification required from the GST department.
The issues of the participants regarding registration and refund of tax were answered by commissioner customs and other authorities available during the open house.
OP Prahladka, chairman EPCH expressed serious concerns on the issue of relief on job work, carrying of samples for exhibitions/office of buying agents, sending samples for display purposes and also free trade samples of no commercial value to the buyers. He expressed that the issue of relief on job work is getting aggravated as most of the exporters are located in metropolitan cities while the artisans and craft persons are spread in the craft clusters in the remote parts of the country. Though those craftpersons with sale below Rs 20 lakhs are exempted but most of the supplies shall be inter-state and therefore shall attract GST. Hence it would require a registration process. A number of exporters were of the view that this would ultimately affect the growth of handicrafts sector.
The draw back issues have not been fully resolved in the new mechanism. Most of the merchant exporters apprehend that there are compulsion of shipping their goods on lower draw back basis. This is an ultimate loss for the exporters.
Similarly the GST rates for MEIS scrip have neither been declared nor HSN codes have been finalised for the same, the premium of such scripts have already fallen in the market which is a clear loss for the exporters.
The handicraft items had been exempted from excise and also there was VAT exemption in 22 states in the country, however, in the GST regime the GST rates of 12, 18 and 28 per cent have been made applicable on handicrafts items, the handicrafts exporters feel that a flat rate of 5 per cent GST may be made applicable on handicrafts items with value cap of Rs 5,000.
EPCH has also brought out a comprehensive FAQs on GST and discussion was also held on the same during open house.
GST Council is keeping a close watch on implementation of GST through head of sectoral group appointed by them for different sectors of the economy. Handicraft sector is the second largest employment provider sector after agriculture. 70 lakh artisans, craftpersons, more than 11,000 manufacturers, merchandisers, small and tiny entrepreneurs play a vital role in increasing exports and earn foreign exchange for the Country.
Pradeep Goel, Commissioner, Central Board of Excise and Custom (CBEC) and Head of Handicrafts sectoral group chaired the open house.