The GST Council has given relief to small and e-commerce exporters. Now tax refund will be available even on low-value goods. The reduction in GST rates will benefit the textile, leather, packaging, toys and logistics sectors. This will reduce costs, increase exports and consumers will get cheaper goods.
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There is a relief news for e-commerce exporters and small businessmen. The GST Council has approved an important proposal and completely abolished the limit of GST refund on low value goods. This means that now no matter how small is the value of the exported goods, the benefit of tax refund will be available.
What is the new change?
Till now, small exporters had difficulty in getting refunds because GST refund was limited to low value goods. But now, the CGST Act, 2017 will be amended and all types of exports, whether low or high value, will be eligible for tax refund.
Biggest relief to e-commerce exporters
This move will prove to be a boon especially for those exporters who send small shipments abroad through courier or postal services. Now they will not have to worry about not getting tax refund. This will improve their cash flow and remove the shortage of working capital.
Industry welcome
The Commerce Ministry says that this reform was pending for a long time and removes the major concern of small exporters. Industry bodies have also welcomed this move. They say that faster refund, temporary relief in tax structure and rationalization of rates will reduce the burden of small businessmen and also strengthen the supply chain.
Which sectors will benefit?
This reform will not only provide relief to exporters, but will also make many big sectors competitive. GST on paper, textile, leather and wood has been reduced from 12-18% to 5%. This will reduce the production cost of these sectors. GST on toys and sports goods has been reduced from 12% to 5%. This will boost domestic production and reduce dependence on imported goods.
GST on trucks and delivery vans has been reduced from 28% to 18%. This will have a direct impact on logistics costs and exporters will get a competitive edge in the global market. Reducing tax on packaging material will reduce the cost of exporters and give them an opportunity to offer better prices in the foreign market.
Promotion of Vocal for Local
The government believes that these reforms will strengthen ‘Vocal for Local’. Small and medium scale businessmen will be able to make their mark at the international level. Also, this step will prove to be a big support towards making India a global hub in sectors like textiles, handicrafts, auto components, tractors and food processing.
What will be the impact on consumers?
While this reform is going to reduce costs for exporters and businessmen, it is also good news for consumers. Due to reduction in tax rates, the pressure of inflation will be reduced and better goods will be available to common customers at a lower price.
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