Exempt exports from GST: TNCCI Madurai to Centre

MADURAI: Tamil Nadu Chamber of Commerce and Industry (TNCCI), Madurai, has urged the Union Government to extend exemption of Integrated Goods and Services Tax (IGST) on transport charges for goods shipped by sea and air from India.

The Central Board of Indirect Taxes and Customs (CBIC) introduced the IGST exemption on transport charges in 2018, extended it twice and the last such extension ended on September 30, 2022. Since this exemption has not been extended from October, 5 percent GST could be levied on freight charges for sea freight and 18 per cent on air freight. It would increase the cost of goods and make it difficult for exporters to compete on price with other countries in the international market, affecting export trade.

“Since the RBI raised the repo rate to 5.9 per cent, the interest on commercial loans has increased, and exporters would have to pay GST on freight charges, which could have a major impact on cash flow of their business,” N. Jegatheesan, president, TNCCI, Madurai said on Saturday.

“When perishable agricultural produce such as fruits, vegetables and flowers are exported from our country, in many cases the air freight charges are found to be higher than the value of the exported goods. Currently, exporters will have to pay an additional 18 percent GST on freight charges,” he said.

After the COVID pandemic, all importers of international market were seeking a grace period of three to six months to pay money for the goods and hence the exporters were forced to increase their investments with great difficulty. “If GST is levied on freight charges, exports will be severely affected and foreign exchange of the country will also decrease,” he said.

On the one hand, the Union Ministry of Commerce and Industry wanted each and every district to identify the export of at least one product and promote and on the other hand, it forces exporters to pay GST on freight charges, hampering cash flow. “Nowhere else in the world GST is levied on exports and related services. Hence, TN Chamber has urged Centre to exempt exports and related services from GST so as to boost exports,” he said.