MUMBAI: An intoxicating clash of smells pervades the Crystal Tea factory in Coimbatore, as bustling workers and clanging machines package blends for customers from Italy to New Zealand. Amid such colourful scenes, however, India’s celebrated tea export sector is staggering under the impact of the new tax regime introduced across the country last summer. Like other exports, overseas tea sales are exempt under India’s tax code. But while merchants could previously claim a tax exemption, under the new goods and services tax (GST) they must pay the levy in full and then seek a refund. India’s then-commerce minister promised before the GST was unveiled in July that 90 per cent of refunds would be processed within 10 days. Instead, the new regime’s IT backbone has proved unable to process exporters’ claims, resulting in severe delays to payouts. The GST was presented as a means of boosting economic efficiency through cutting-edge technology and fiscal simplicity. It consolidated a web of federal and state levies into a single structure, reliant on a vast digital platform built by IT services group Infosys. However, the upbeat official narrative around GST has been challenged by exporters, who claim the system’s failings have created a ruinous liquidity crunch. Infosys declined to comment when contacted by the FT. The Federation of Indian Export Organisations (FIEO) estimates that exporters paid refundable tax of Rs500bn ($7.7bn) in the first four months of the new regime. It has blamed the delayed refunds for sputtering exports, which suffered a 1 per cent year-on-year fall in November, compared with 28 per cent growth in March. Pratik Jain, head of PWC’s indirect tax practice in India, says the problems stem from a failure to allow sufficient time to test the IT system.
DRI busts smuggling rackets, seizes 31kg gold
VIJAYAWADA: The Directorate of Revenue Intelligence (DRI) seized 31.5 kg gold worth 13.3 crore in the last three days. DRI...
