The Unsold inventory of imported chocolates, cosmetics, and confectionery; which was in the 28% GST bracket during inbound shipments but; now in the 18% GST bracket are eligible for claiming refunds on the excess tax paid. A senior official at the CBEC said that; the importers could request refund if they have imported goods at 28% but; are selling them at 18%. However, for claiming a refund, they need to submit proof.
Importers of Food & Cosmetics can Get Refund on Excess GST
The GST council had cut tax slabs on 178 products, including chocolates, deodorants, confectionery, and shampoo, from 28% to 18%.
A leading importer of chocolates told that; they will continue to sell the imported goods at 28% as of now and will wait for fresh new stocks with revised MRPs. He further added that their import cycles are dependent on international producers, unlike local manufacturers. The chief financial officer at Dabur, Lalit Malik said that the reduction in GST rates for products imported at a higher GST rate might have some short-term working capital impact on the importer. This can be adjusted to future sales.
Indian vendors are in the process of producing stocks with revised prices on packaging; importers say that they are saddled with inventories because their import cycles extend anywhere between 3 & 6 months.
The government allows the companies to put stickers on unsold stock; printing the new MRPs as long as their earlier MRPs are also visible. This facility is available until 31st December 2017 and applies to both imported and manufactured products. Following this, many importers are putting stickers with revised MRPs while some others are facing concerns with international clearances on revised labels from the importing countries.
Dharmesh Panchal, partner, indirect tax at PwC said that even if GST was 28% at the time of import, if it is 18% at the time of sale, then the benefit still has to be passed on to the customers. However, in such cases, the importer might have an issue regarding working capital as the input IGST might take longer to liquidate; especially if the margin is thin.