GST Impact on Exports and Food Products

It is more than just Tax for the industry.

The GST system is a single tax system. GST is an indirect tax which Indian Government introduced July 1st, 2017. GST is applicable throughout India. GST replaced all the different layers of taxes which were applicable by the state and central governments. The statement of GST is ‘One Nation One Tax’. France, Italy, Australia and many other countries have accepted GST as their taxation system.

Due to changing of taxes into one single tax, industries and businesses faced some problems in migration. GST claims that the implementation of GST will bring down the prices of products. Also, thegovernment has decided on staggering the GST tax structure that varies based on the industry/product. They start at 5%, 12%, 18% and go up to 28%. based on product/industry category. There are certain exceptions and exemptions in GST.

How will it affect the exports of food products?

GST on the food export industry is a blessing due to many reasons. India is an agro-based country and the exports are huge. Under the "Make in India" initiative from the Indian Government, there are various subsidies provided by it. Under GST, the exports or deemed exports are zero rates taxed. This means that exports are virtually duty-free. Exporters can get a refund for the exports they make or they are deemed to make.

Advantages of GST for Food Exports. 

  1. Single unified taxation system. Hassle free exporting process.
  2. Zero rating of exports makes Indian exports more competitive in the foreign markets.
  3. Speedy legal documentation and process.
  4. Indian exporters consider themselves providing low prices for export due to no GST on exports.
  5. Having said that GST is a blessing, it is much of a simplification for the food product exporters.

Disadvantages of GST for Food Exports.

  1. The procedure for thezero-rating tax is that exporters need to bill the products with tax and claim it as a refund.
  2. The legal processing is slow in India. Government is trying its best to speed up the refund process of GST.
  3.  The Indian food industry is not fully self-reliant.

Does it really help the food industry?

If all goes according to the vision of the government for introducing and implementing the GST, Indian Food Exporting industry will see a positive impact.