Exporters association want exemption of IGST payment extended

Tirupur Exporters Association (TEA) Tuesday urged the Centre to extend exemption of payment of IGST for machinery imported under the EPCG (exports promotion capital goods) scheme.

The notification exempting payment of the integrated goods and services tax (IGST) while importing machinery under the scheme is valid till September 30.

If the exemption was not extended, exporting units have to pay IGST upfront which is an additional burden on the units, TEA president Raja M Shanmugham said in a letter to Union Commerce Minister Suresh P Prabhu, a copy of which was released to the press here.

The TEA chief said the concern is that upfront payment of IGST would affect the working capital of the exporting units as the GST refund through Input Tax Credit refund route would take time to receive the amount.

As more than 80 per cent of the exporting units are MSMEs, they could not meet their financial requirements and this ultimately would affect day-to day-operations, he said.

Besides, the exporting units cannot get IGST refund if they did not have domestic sales and this was a major issue, he said, adding about 95 per cent of the exporting units in Tirupur cluster did not have domestic sales.

Continuous modernisation was needed for the garment exporting units as the buyers were insisting on consistent quality and installation of state-of-the-art machinery, he said.