Kolkata, Aug 19 (IANS) The Union Ministry of Commerce is taking initiatives to bring suitable legislative changes in the SEZ and Foreign Trade Act (FTA) to make them consistent with the Goods and Services Tax (GST) regime, a top official said on Friday.
The ministry will also modify schemes of the Directorate General of Foreign Trade (DGFT) to make them consistent with the GST regime, the official said.
“We need to look at our own legislations. The SEZ and FTA will require suitable legislative changes to be consistent and compliant with the GST Bill,” said Rita Teaotia, Secretary in the Ministry of Commerce, at an event ‘Emerging Contours of Global Trade’ organised by the Confederation of Indian Industry (CII) here.
“Many of the schemes of DGFT are required to be moderated and modified in order to be complaint with the GST regime,” she said.
There is expectation that the GST would increase GDP growth by 1-1.5 per cent per annum, she noted.
About the kind of legislative changes the ministry is looking at, the Commerce Secretary said: “There are references in the legislation to excise tax and other duties. We are going to look at wherever any of the taxation structure is referred to and procedural parts in the SEZ Act are referred to. We need to see that they are consistent with the GST regime. So, that is the exercise.”
She said the government’s legal experts were evaluating various aspects in the draft legislation. “Right now, some of our legal experts are going through with a fine toothcomb,” Teaotia said.
“We would not freeze it (current exercise) till the GST Act is final because it is got to be based on that. Nevertheless the spadework is going on right now,” she added.
Speaking on the input tax credit on exports, Teaotia said that there were elements of cascading of taxes, even when a duty drawback scheme was offered to the industry, since it covers the central taxes and not the state taxes.
“So with the GST regime, one gets a much more clean line and that should be bringing down incidence of taxes that one is required to pay and finally the cost of the final product,” she said.
“Some of our schemes of DGFT are linked to the refund of taxes. Since the format in the GST already provides for that for exports, we will have to look at how they are required be moderated. That too is going to be contingent on what are the final contours of how GST emerges,” the Commerce Secretary said when asked about the details of schemes of DGFT that are required to be moderated.