Textile exports tax rebate plan on plate
A scheme that offers rebate on all taxes at the central and state levels to the exporters of apparel and made-ups is likely to be extended to all categories of textile exports as an alternative to the MEIS scheme that must be withdrawn under WTO rules.
The government is mulling the option of extending the Rebate of State and Central Taxes and Levies (RoSCTL) scheme to all textile products. Under the scheme, exporters of garments and made-ups are reimbursed all un-remitted input taxes paid at the state and central levels.
“The Merchandise Export Incentive Scheme (MEIS) is not World Trade Organisation-compliant. There is need for a scheme which is acceptable globally and also provides a competitive edge to Indian exporters. The extension of RoSCTL to all textiles would help the sector. We are looking into that issue,” a senior commerce ministry official said.
Once MEIS is withdrawn from the textile sector, it would be taken away one by one from the other sectors as well.
Under MEIS, claimed by the bulk of garments and textile exporters, the government gives incentives to exporters equivalent to about 4 per cent of their export value in the form of duty credit scrips that can be used to pay customs duties and are freely transferable.
As it is a direct export subsidy and the textile sector’s phase-out period for such subsidies ended in 2018, it would have to be withdrawn soon.
India has moved above the threshold of per capita gross national income of $1,000, which makes it ineligible to offer export sops to any sector.
For the textile sector, officials said there was no room for extension beyond 2018 as exports officially crossed the threshold limit of 3.25 per cent of world exports in 2010 and the eight-year phase-out period is over.
A similar rebate on all embedded state and central taxes and levies is being discussed for other textile segments (fibre, yarn, fabric etc) also, officials said.
Ganesh Kumar Gupta, president of Fieo, told The Telegraph that the apex exporters’ body “has pitched for the extension of the scheme to all textiles so that the labour-intensive sector is competitive in the global marketplace.”
The RoSCTL scheme will benefit garments and made-up exporters as shipments from neighbouring countries such as Sri Lanka, Bangladesh and Vietnam enjoy zero duty access to the EU, which is the biggest export market for the domestic apparel sector.
SOURCE: The Telegraph, Online Edition
The pilot project envisaged for rolling out simplified monthly GST return forms from April 1 has been deferred and the new forms would be made available once they the notified and the software is ready.
The GST Council had in July last year decided that the simplified GST return forms — Sahaj and Sugam — would be rolled out on a pilot basis from April 1, 2019, while mandatory filing across the country would kick in from July.
In July last year, the Central Board of Indirect Taxes and Customs (CBIC) had come out with the draft GST returns forms and sought comments from stakeholders.
Under the new return filing format, taxpayers who have no purchases, no output tax liability and no input tax credit in any quarter of the financial year would have to file one ‘Nil’ return for the entire quarter. Facility for filing quarterly return shall also be available by an SMS.
The new return filing format would replace the current requirement of filing final sales return GSTR-1; but as per the plan, summary sales return GSTR-3B would continue for some time.
“The pilot project of new return filing has been deferred. New date would be decided. The forms would be notified first; following which, the pilot would be launched. Systems are being developed for the new forms,” an official said.
Small taxpayers, with turnover of up to Rs 5 crore in the last financial year, can file quarterly return with monthly payment of taxes on self-declaration basis.
The return form ‘Sahaj’ is for businesses which make supplies to only consumers (B2C). It includes details of outward supplies and inward supplies attracting reverse charge as well as summary of inward supplies for claiming input tax credit (ITC).
Also, such B2C businesses will have to show harmonised system nomenclature (HSN)-wise summary of supplies and interest and late fee liability details along with payment of tax and verification. HSN is a code number to specify a particular product.
Besides, businesses making supplies to both businesses (B2B) and consumers (B2C) have to file returns form ‘Sugam’. It includes summary of supplies made and tax liability, summary of inward supplies for claiming ITC, along with details of interest due and tax payment.
When goods and services tax (GST) was rolled out from July 1, 2017, a three-stage monthly return filing system was set up — GSTR-1 (sales return), GSTR-2 (purchase return) and GSTR-3 (final returns based on GSTR-1 and 2 matching).
However, with businesses facing trouble, the GST Council decided in November 2017 to keep filing of GSTR-2 and 3 in abeyance. It also introduced a simpler GSTR-3B to facilitate easier return filing and tax payment.
SOURCE: PTI
The Indian commerce ministry recently introduced an online system for exporters to obtain an export licence for restricted category goods. This may promote paperless work and ease of conducting business. Both application filing and the consultation process with administrative departments will be held online, a Directorate General of Foreign Trade (DGFT) notice said.
The notice came into effect from March 19. The application for export of such goods are now filed in hard copy and the consultation with the concerned agencies is also done through one-to-one meetings.
Applications will be accepted off line till March 31. But from April 1, the new process is mandatory. The Federation of Indian Export Organisations (FIEO) has welcomed the move.
The directorate recently came up with a new online facility for obtaining import licence for restricted category goods.
SOURCE: Fibre2Fashion
A deceleration in industrial activity and the fear of a global economic slowdown are expected to prompt the Reserve Bank of India to cut the repo rate by 25 basis points in the monetary policy review scheduled on April 4.
Retail inflation staying below the RBI’s 4-per cent target is a comfort factor for the central bank to put through a second rate cut on the trot. Market players say a rate cut to support growth will be opportune.
Industrial growth, represented by the Index of Industrial Production, dipped to 1.7 per cent in January from 2.6 per cent in December 2018.
Though the retail inflation, as measured by the consumer price index, rose to a four-month high of 2.57 per cent in February against 1.97 per cent in January, the reading is still lower than the RBI’s inflation target of 4 per cent.
In its sixth monetary policy review, in February, the central bank had cut the repo rate from 6.50 per cent to 6.25 per cent. The repo rate is the rate at which the RBI provides funds to banks to overcome short-term liquidity mismatches.
Union Bank of India MD & CEO Rajkiran Rai G said: “Rate cut seems to be very much visible now. The last monetary policy committee (MPC) meeting talked about output gap (opening up modestly). I think the RBI was very clear last time when they spoke that they are trying to push growth. There are indications of global growth weakening. So, a rate cut will give a fillip to growth.”
Soumya Kanti Ghosh, Group Chief Economic Advisor, State Bank of India, said: “Rural demand continues to look increasingly weak and fragile... Urban demand is also worrying. A deceleration in global trade growth is also impacting export outlook through the trade channel. Investment scenario, as can be inferred from order inflows, has declined in Q3FY19 by 20 per cent. Credit growth is not broad-based and is in selective areas.
“We expect at least a 25 basis points rate cut in the April policy (cumulative 50-75 bps over next 2/3 policies) though we believe the stage is ripe for a larger rate cut. If the rate cut is of 25 basis points only, then the RBI could indicate more cuts through a possible shift in stance/ policy statement.”
SOURCE: The Business Line
Under the GST regime, export of goods and services are deemed as inter-state supplies and are subject to Integrated GST (IGST). All supplies of goods and services which qualify as export of goods or services are zero-rated, that is, these transactions attract a GST rate of zero per cent. Therefore, exporters are allowed to claim an input tax credit on all inputs used to produce goods or render the services without charging GST to their customers. However, these benefits are available subject to prescribed conditions, safeguards and procedures. Here’s all you need to know about your GST refund.
Conditions for a supply to be qualified as an export: A supply of service will be considered as an export of service only if:
A supply of goods is considered as an export if the place of supply is located outside India. Repatriation of convertible foreign exchange is not mandatory in case of export of goods.
Registration: As specified in notification number 10/2017- Integrated Tax, It is mandatory for all exporters to register under GST if the aggregate turnover exceeds Rs 20 lakh (Rs 10 lakh in special category states).
In order to avail the option of export without payment of IGST, a bond or Letter of Undertaking (LUT) should be furnished prior to the export. It is used to establish that goods will be exported within three months 15 days from invoice date and foreign currency for services will be received within one year 15 days of the invoice date.
A bond is to be submitted on a non-judicial stamp paper for each export and should be supported by a bank guarantee of an amount not exceeding 15 per cent of the bond amount. A LUT is valid for one year and is to be submitted on the company letterhead. It can be filed by all exporters except those who are prosecuted for a specific amount.
Refund: If you are making a zero-rated supply, you shall be eligible to claim a refund under either of the options. First, you may supply goods or services or both under bond or LUT, subject to the prescribed conditions, without payment of IGST and claim a refund of the unutilized input tax credit of Central GST, state GST/union territory GST and Integrated GST. Second, you may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of IGST and claim a refund of such tax paid on goods or services or both supplied.
Requisite documents: In case of export of services, a Bank Realization Certificate (BRC) or a Foreign Inward Remittance Certificate (FIRC) is required to support the refund claimed. A BRC is issued by your authorized bank on each invoice and a FIRC is a certificate issued by the bank against any inward remittance received against an export.
In case of export of goods, there is no requirement of a separate application for refund of IGST paid. The shipping bill and Export General Manifest (EGM) filed by an exporter are deemed to be an application for refund. Further, valid GSTR1 and GSTR 3B should have been filed by the exporter to claim a refund as the validated information is electronically transferred from the GST portal to the customs portal, that is, ICEGATE.
SOURCE: The Financial Express
The Department for Promotion of Industry and Internal Trade (DPIIT) is working on a definition of 'accredited investors', who could be provided tax incentives for investments in startups, an official said.
The department, under the commerce and industry ministry, has already prepared a draft definition and is now seeking views of stakeholders.
The official said these accredited investors, which can include trusts, individuals, family member of a startup and unlisted companies, may get the exemption from angel tax under Section 56(2)(viib) of Income Tax Act, 1961, beyond the Rs 25 crore limit.
Currently, the government allows startups to avail full angel tax concession on investments up to Rs 25 crore.
Besides this, three categories of investors with a specified limit of turnover and net worth -- listed companies, non-residents and alternate investments funds category I like venture capital funds -- also get an exemption from angel tax on investment beyond Rs 25 crore.
Section 56(2)(viib) of Income Tax Act provides that the amount raised by a startup in excess of its fair market value would be deemed as income from other sources and would be taxed at 30 per cent.
Touted as an anti-abuse measure, this section was introduced in 2012. It is dubbed as angel tax due to its impact on investments made by angel investors in startup ventures.
Startups also enjoy income tax benefit for three out of seven consecutive assessment years under section 80-IAC of the Act. To get this benefit, they need to seek the exemption from an inter-ministerial board.
An angel investor is the one who put funds in a startup when it is taking steps to establish itself in the competitive market. Normally about 300-400 startups get angel funding in a year. Their investment in a unit ranges between Rs 15 lakh to Rs 4 crore.
"We are seeking views of stakeholders on the definition of accredited investors. They will be exempted from section 56 (2) (viib). We will define it as a separate category like listed companies," the official said.
Earlier this month, the DPIIT has also held consultations with startups, investors, and officials of Central Board of Direct Taxes and Securities and Exchange Board of India (Sebi) to discuss ways to increase the flow of funds to budding businesses.
"There is a need to incentivise investments in startups and the government is committed to removing all impediments," as per the official.
As many countries provide tax and other incentives to angel investments into startups, the government is also looking at those.
SOURCE: The Business Standard
Untreated water being released in open land near Sachin GIDC
SURAT: Many textile mills and chemical units located in Sachin GIDC have come under the radar of Gujarat Pollution Control Board (GPCB) for releasing effluents and hazardous chemical waste in storm drains.
Sources said unit owners had set up illegal pipeline networks inside Sachin GIDC, which were connected to storm drains for release of the effluents. The issue came to light when Sachin GIDC Industrial Co-op Society took up cleaning of storm drains last week.
"We have received complaints about release of effluents in storm drains at Sachin GIDC. We will carry out surprise checks and take action against those violating law," a GPCB officer said.
Sachin GIDC Industrial Cooperative Society member Mayur Golwala said, "We had written many letters to Sachin Notified Area Authority and GPCB, but no action has been taken. Recently, we laid our hands on the illegal network set up by the unit owners. This is a serious issue and needs to be addressed by pollution control authorities at the earliest."
Sachin GIDC houses more than 80 textile dyeing and printing mills and about 30 chemical units. Though there is a common effluent treatment plant (CETP) inside the GIDC, some mills owners resort to releasing effluents in storm drains.
Golwala added, "Some of the office-bearers of Sachin GIDC Cooperative Society are hand-in-gloves with the mill owners for financial gains. We have decided to write to the state government to build pressure on the GPCB."
A senior officer of Sachin Notified Area Authority said, "We are in the know of illegal practice going on in the GIDC, but the mill owners have a strong lobby. We have taken up cleaning of the storm drains and if any illegal network is found, we will report it to the GPCB authorities for action."
Meanwhile, a few chemical unit owners in Sachin GIDC held a meeting on Saturday to discuss illegal release of effluents in storm drains. The mills owners were of the opinion that the GPCB should take stern action against law breakers.
SOURCE: The Times of India
FLA urges apparel firms to adopt transparency requirements
In response to requests from trade unions, and other independent labour rights and human rights organisations, the Washington DC-based Fair Labour Association (FLA), a non-profit collaborative effort of universities, civil society groups and businesses, on February 27 voted to require its company affiliates to publicly disclose their supplier lists.
Members of the Transparency Pledge Coalition, a group of global unions and other independent labour rights and human rights organizations, will monitor this decision to ensure its full and meaningful implementation while calling on other apparel sector multi-stakeholder Initiatives (MSIs) and business associations to follow suit.
This FLA decision follows the Transparency Pledge Coalition’s request that the FLA require supply chain disclosure as a condition of membership.
Since its inception in 2016, the coalition has successfully convinced numerous apparel brands to adopt its minimum standard on transparency and persuaded many others to take meaningful steps in the right direction.
The nine organisations that are members of this coalition are Clean Clothes Campaign, Human Rights Watch, IndustriALL, International Corporate Accountability Roundtable, International Labor Rights Forum, International Trade Union Confederation, Maquila Solidarity Network, UNI Global Union, and Worker Rights Consortium.
If the FLA, with offices in China and Switzerland, follows this decision with robust enforcement of this requirement for its member companies, it will be a significant development towards greater transparency and corporate accountability for garment workers’ rights in global supply chains, Human Rights Watch reported on its website.
The coalition will continue to engage with the FLA’s Factory List Transparency Working Group to ensure that there is robust implementation.
SOURCE: Fibre2Fashion
Japan's business mood slumped to a two-year low in the March quarter, a central bank survey showed, underscoring concerns that Sino-U.S. trade tensions and softening global demand were taking a toll on the export-reliant economy.
The gloom was most pronounced among big manufacturers, where sentiment soured at the fastest pace in more than six years, stoking fears that uncertainty over the global outlook could discourage companies from spending on wages and expenditure.
Separately on Monday, a private business survey showed manufacturing activity in Japan contracted for a second straight month in March, with output down at the sharpest rate in nearly three years.
The downbeat surveys bolstered the view that Prime Minister Shinzo Abe's reflationary policy dubbed "Abenomics" is sputtering, keeping the Bank of Japan under pressure to maintain or even ramp up its massive stimulus programme, analysts say.
If external weakness spreads to relatively firm domestic demand, that would pressure Abe to forego the twice-delayed sales tax hike, scheduled for October as he focuses more on growth than fiscal reform.
"We see overall weak numbers and the outlook is worsening, reflecting the slowdown in Japan's economy," said Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley Securities.
"Eventually, the slowing economy will hurt employment, so there is a growing chance the BOJ will have to re-examine its policies," he said.
SALES TAX HIKE
The headline index for big manufacturers' sentiment stood at plus 12 in March, worse than plus 19 marked three months ago and a median market forecast of plus 14, the BOJ's closely-watched quarterly "tankan" survey showed on Monday.
The index hit the lowest level since March 2017 and fell at the fastest pace since December 2012, as manufacturers felt the pinch from slumping demand for electronics parts, automobiles and machinery goods, the survey showed.
The index for non-manufacturers fell to plus 21 from plus 24 in the December survey, hitting the lowest level since March 2017 and undershooting a market forecast of plus 22.
Both big manufacturers and non-manufacturers expect business conditions to worsen further in the three months ahead, the survey showed, suggesting the hit from simmering trade tensions could broaden.
For now, companies' spending plans are holding up. Big firms expect to increase capital expenditure by 1.2 percent in the year that began in April, compared with a median market forecast of a 0.4 percent decline.
But indices measuring price developments show companies are unable to raise prices of their goods much even as a tightening job market pushes up labour costs, a development that could hurt their spending appetite ahead.
"As long as domestic demand holds firm the sales tax will increase as planned, although you cannot completely rule out the possibility of further delay," said Masaki Kuwahara, a senior economist at Nomura Securities.
And signs of weakening demand are emerging at upstream manufacturers, including Nagumo Seisakusho Co, a small maker of precision moulds in the northern Japan. The company told Reuters earlier this year that orders have fallen sharply since late 2018 as its bigger clients suffered from slowing Chinese demand.
Factories across Japan depend heavily on Chinese customers, the world's second-biggest economy, to buy their products, especially the parts and equipment that reach China's manufacturers.
Big firms such as factory-robot makers Yaskawa Electric Corp and Fanuc Corp; Mitsubishi Electric Corp, trading house Mitsui & Co and toilet giant Toto Ltd have also blamed China as they cut profit forecasts.
The tankan survey is among various data the BOJ will examine at its two-day rate review later this month, when it issues fresh quarterly economic growth and inflation projections.
The BOJ is in a bind. Years of its heavy money printing and prolonged ultra-low rates have dried up the bond market and squeezed profits at banks, prompting Japan's banking lobby to urge the BOJ to rethink its monetary stimulus.
Makoto Takashima, the new head of Japan's banking lobby, told Reuters in an interview that lenders should not blame the BOJ's ultra-loose policy for their inability to boost revenue, in a comment that drew a contrast with those of his predecessor.
SOURCE: The Business Standard.
Businesses are on board with the government's plan to introduce four different rates of value-added tax (VAT) from July, clearing the way for the implementation of the much-talked about VAT law 2012.
As per the scheme, there will be four different rates of VAT applied on most of the goods and services under the existing VAT law 1991: 5 percent, 7.5 percent, 10 percent and 15 percent.
“We have agreed in principle and will fix the remaining issues later,” Shafiul Islam Mohiuddin, president of the Federation of Bangladesh Chambers of Commerce and Industry, told reporters after a meeting yesterday with Finance Minister AHM Mustafa Kamal.
Representatives of the top trade bodies, revenue officials and Salman F Rahman, the prime minister's adviser on private industry and investment, were present among others at the meeting held on the premises of the planning ministry.
Over the next two months, the National Board of Revenue (NBR) in consultation with businesses will slot the sectors into the four VAT rates.
“Businesses have accepted the 5 percent, 7.5 percent and 10 percent rates of VAT,” Kamal told reporters after the meeting.
The introduction of multiple rates would require amendment of the VAT and Supplementary Duty Act 2012 as it envisaged a uniform 15 percent rate, according to NBR officials familiar with the law.
The new law, which was framed at the prescription of the International Monetary Fund to boost revenue collection, was not received well by businesses.
It was scheduled for implementation under an automated environment from 2015 but was deferred on several occasions, with the most recent being in 2017 -- just days before it was due to take effect on July 1.
The government postponed its implementation by two years amid pressure from a section of businesses and lobby groups.
The 15 percent standard rate would remain in sectors such as cigarette, telecom and gas, said NBR Chairman Md Mosharraf Hossain Bhuiyan after the meeting.
“We will fix the rates of VAT in the budget proposal. We have also hiked the threshold of VAT-free turnover ceiling and decided to rationalise the turnover tax,” Bhuiyan said.
The VAT-free turnover limit would be increased to 50 lakh from existing Tk 36 lakh, said a senior NBR official.
The ceiling of turnover tax would be increased to Tk 3 crore from Tk 80 lakh, and the rate of turnover tax would be hiked to 5 percent from 3 percent at present, he added.
“All will have to pay VAT,” Bhuiyan said, adding that the government would provide electronic fiscal device so that the VAT paid by customers come to the state coffer.
Meanwhile, the budget for fiscal 2019-20 will be placed in the parliament on June 13, Kamal said.
“There will be nothing in the coming budget that will affect businesses. This government in no way will question business by anti-corruption commission, customs and police. It will also not think of sending business to prison,” the minister added.
SOURCE: The Daily Star, Dhaka
The Pakistan Tehreek-e-Insaf (PTI) government is committed to creating a business-friendly policy for the textile sector, said Adviser to Prime Minister on Commerce Abdul Razak Dawood.
Addressing the first meeting of the task force, formed to formulate the third textile policy for 2019-2024 on Saturday, he reaffirmed that the government would support and facilitate the textile sector, which was vital for the country’s economy.
Lamenting that the sector faced several challenges, including cost of electricity and gas coupled with outdated machinery, the adviser apprised that effective decisions would be taken by the government to make the sector progressive, competitive and viable.
He emphasised focus on value-added factors to deal with challenges for revival of textile sector adding that a meaningful textile policy was needed to boost exports.
Dawood was of the view that the industry should take advantage of the GSP Plus status. He pointed out that textile sector was the first step towards industrialisation, which should be consolidated by resolving issues of the sector.
“The sector possesses vast potential to resolve the challenges of unemployment and poverty,” he declared and directed the task force to formulate a textile policy targeting new markets especially Japan, Canada and the UK.
Task Force Chairman Salman Shah briefed the meeting regarding the importance of textile sector in total GDP. During the meeting, various committees were formed to address the issues whereas it was also decided that the textile policy 2019-24 would be formulated on recommendations of these committees.
On a separate occasion, Dawood pointed out that the government was prioritising innovation and promotion of entrepreneurship in the country.
He shared that Prime Minister Imran Khan was keen to encourage entrepreneurship and initiated steps in that regard.
“Pakistan needs more entrepreneurs to enhance business activities,” he outlined. “China and the United States became great nations due to massive contribution from entrepreneurs.” The adviser emphasised young entrepreneurs to adopt a long-term strategy in a bid to be successful in their respective fields instead of looking for overnight success.
Later, talking to the media persons, he said that the country’s economy was moving towards the right direction, however, more efforts were needed for further improvement.
SOURCE: The Express Tribune, Lahore
