GST: Submission requesting for extension of exemption on Integrated Goods and Services Tax paid on capital goods procured by units in STPI/ EOU

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GST: Submission requesting for extension of exemption on Integrated Goods and Services Tax paid on capital goods procured by units in STPI/ EOU

Tejasvi

@tejasvi

June 23, 2022

Public Policy

656

The Software Technology Parks of India (STPI) Scheme is a 100% export-oriented programme for developing and exporting computer software, as well as professional services via communication links or physical media. The Export Oriented Units (EOU) scheme, on the other hand, was intended to stimulate exports, raise foreign revenues, and create jobs in India.

The Government has provided exemption on customs duty and IGST on import of capital goods to these units for the benefit of business group at large.

To recap, the exemption available to EOUs/ STPI from whole of the customs duty and IGST was reinstated by the government in the post GST era by way of various notifications listed below:

Notification 78/2017 -Customs (N.T), dated October 13, 2017 – Vide this notification, Government of India has provided exemption from whole of customs duty and IGST upto March 31, 2018;
The above benefit was extended time to time vide Notification no.33/2018-Customs, dated March 23, 2018, Notification no.65/2018-customs, dated September 24, 2018, Notification no.9/2019 – Customs, dated March 25, 2019, Notification no.16/2020 – Customs, dated March 24, 2020, Notification no.19/2021-Customs, dated March 30, 2021 and Notification no.18/2022-Customs, dated March 31, 2022.
The last notification extending the benefit i.e. Notification no.18/2022-Customs, dated March 31, 2022 was issued wherein the exemption was extended upto June 30, 2022.

Therefore, post June 30, 2022, the option to claim IGST exemption by EOU/STPI will no longer be available. This will result in significant burden for service export units and would put undue strain on finances of units engaged in 100% exports as these companies have huge investments by way of capital expenditure.

In this regard, we have made a representation to GST officials on June 20, 2022 requesting them to extend the customs duty & IGST benefits for STPI/EOU units beyond June 30, 2022. We have also requested that the exemption in respect of import of capital goods should be extended without any time limit. Where upfront exemption is not extended, refund of input credits on capital goods should be permitted by way of an amendment to the provision, in the year of purchase itself.

We hope you will find the update useful. We will keep you posted on further developments in this regard.

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Tejasvi

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