IGST, cess exemption to EoUs, STPIs extended till March next year

The finance ministry has extended by six months till March 31, 2019 exemptions granted to EoUs and STPIs from payment of IGST and compensation cess.

The Integrated GST (IGST) and cess exemption to Export Oriented Units (EoUs) and Software Technology Parks of India (STPI) was scheduled to come to an end on September 30.

Through a notification, the Central Board of Indirect Taxes and Customs (CBIC) said that taxes would be levied on these units under the Goods and Services Tax (GST) with effect from April 1, 2019.

PwC India Partner and Leader (Indirect Tax) Pratik Jain said before introduction of GST, there was no Customs duty or SAD (special additional duty) applicable on import of goods by EOU/ STPI. However, with the introduction of GST, the government wanted to do away with the exemption and levy IGST on such imports with a refund later, if needed.

While the exemption was removed from July 1, 2017, later it was brought again from October 13, 2017 till April 2018, primarily on account of blockage of funds for exporters and refund related issues.

"The exemption was later extended till October 1, 2018 with an expectations that e-wallet scheme would come in by then, replacing the upfront exemption. However, it seems that it will take more time and hence the exemption has now been extended till end of the financial year 2018-19," Jain said.

The industry, particularly IT/ITeS sector would be relieved that the exemption has been extended. The government perhaps needs to revisit if a e-wallet scheme has to be introduced after the exemption is over or exemption needs to be permanently restored, in line with the practice in pre-GST regime, Jain added.