The Commerce Department has decided to take up with the GST Council and the Finance Ministry the GST related problems faced by exporters, such as issues of compliance, refunds and audits, to ensure speedy redressal of grievances, sources have said.

Exporters have been complaining about receiving show-cause notices from GST authorities, either suo moto or based on audit objection, to pay GST on overseas bank charges, along with interest and penalty, despite the GST council earlier agreeing that it should be paid by the Indian banks. 

90-days time

With the Red Sea crisis slowing down shipments, exporters also want more than the 90-days time allowed right now for EGM filing for merchant exporters when procuring goods for exports at 0.1 per cent concessional GST.

 “The Commerce Department has sought inputs from various export bodies on their GST related woes so that these could be collated, analysed and presented before the GST Council and Finance Ministry for action,” a source told businessline.

Exporters’ body FIEO has also separately submitted to Finance Minister Nirmala Sitharaman the problems faced by the exporting community under the GST regime and sought solutions.

On the notices being received by exporters for non-payment of GST on overseas bank charges, the letter pointed out that the matter was discussed in the GST Council meeting in June 2022 wherein it was decided that GST on such charges should be paid by the Indian bank as they are availing the services of the overseas bank. 

“...the recommendation of the Fitment Committee makes it very clear that IGST on such services has to be discharged by the service recipient for which recipient is entitled to ITC (input tax credit) that can be utilised to set off tax liability. The domestic banks could avail ITC of tax paid by them on reverse charge,” it said.

The GST Council agreed with the same and recommended accordingly, the letter added.  FIEO asked the FM to direct the CBIC to suitably clarify to the GST authorities so that the show cause notices/demand can be stopped.

Shipping space

Another issue faced by exporters, largely owing to the Red Sea crisis and lack of containers and shipping space, is not being able to meet the 90 days time period given for exports and EGM filling in cases where the merchant exporter procures the goods from a manufacturer at 0.1 per cent concessional GST.  

“..we request that the 90 days’ time period may be extended, on merits, by another 60-90 days by the jurisdictional authorities. This will help the exporters who, despite their best efforts,  are failing to complete exports within the 90 days time limit,” the letter stated.

Related Topics