GST should not apply to labour-intensive sectors: Commerce ministry

Live mint By PTI Tue, Jan 03 2017. 09 02 PM IST

Commerce ministry asked the GST council to grant ab-initio exemption to exporters from GST and keep the labour-intensive sectors out of the tax net.

Commerce and industry minister Nirmala Sitharaman. Photo:

New Delhi: Commerce and industry ministry on Tuesday asked the GST council to grant ab-initio exemption to exporters from the goods and services tax (GST) and keep the labour-intensive sectors like leather and plantation completely out of the tax net or put them in lowest slab.

Commerce and industry minister Nirmala Sitharaman, after attending the meeting of the council, said the ministry officials gave presentation to the members. “For the leather industry, we want complete exemption from the GST or keep them in the lowest slab. We made a strong pitch on that as the sector create jobs,” she told reporters.

Sitharaman further said the ministry favoured “fair” look under the GST regime for the cement industry, where taxation is “very high currently”. The sector is important as the government is looking at schemes like housing for all, besides modernising road, port and other infrastructure.

She said that exporters should be given “ab-initio exemption” from the upcoming GST regime. She asked the council “would you treat exporters in such a way that they do not have to pay upfront. Give them an ab-initio exemption and tax them when you have to tax.”

The ministry is not asking for exemptions, “but we raise concerns about the entire procedure” of paying duties first and then seeking refunds. As regards the plantation sector such as coffee, the minister said: “Ideally, we would like to completely keep it out” from the GST but if at all it comes under the new indirect tax regime “it should be kept in the lowest slab”.

When asked whether the commerce ministry has sought a cut in the import duty on gold, she said: “I have been talking about cutting the duty as gold is a critical raw material for gems and jewellery sector.”

She said that restriction-free gold import also discourages smuggling. The imported gold is mainly used by gems and jewellery exporters and people usually consider investment in the precious metal as safe haven. India, the world’s second biggest gold consumer after China, imported 650 tonnes in 2015-16. Gems and jewellery sector had in July urged Prime Minister Narendra Modi to reduce gold import duty to 5% from the current 10% to check shift of business to neighbouring countries.

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