How Will GST Refunds Be Simplified for Low-Value E-Commerce Exports?

New Delhi, Sep 5 (NationPress) In a significant move for e-commerce exporters, the GST Council has given the green light to the DGFT’s suggestion to abolish the value threshold for GST refunds on low-value shipments. The relevant section of the CGST Act, 2017 will be modified to permit refunds for exports made with tax payments, irrespective of their value.

This long-anticipated change aims to address the challenges faced by small exporters, especially those utilizing courier or postal services. The Commerce Ministry stated that this reform is expected to simplify processes and enhance low-value e-commerce exports.

The government has also introduced a series of GST rate adjustments designed to decrease expenses, rectify duty-related discrepancies, and enhance competitiveness across various sectors including paper, leather, wood, handicrafts, commercial vehicles, tractors, food processing, textiles, toys, and packaging materials.

The elimination of the value threshold for GST refunds is poised to significantly aid small and e-commerce exporters by making low-value shipments eligible for refunds. This development will enhance cash flow, alleviate working capital challenges, streamline compliance, and simplify refund procedures, particularly for consignments sent via courier or postal services.

As a result, MSMEs and small sellers will be able to engage more effectively in international trade, thereby boosting the growth of low-value e-commerce exports, according to the ministry.

Industry associations have welcomed these reforms, highlighting that initiatives like expedited export refunds, provisional relief under the inverted duty structure, and rationalization of rates in critical sectors will alleviate liquidity constraints, minimize working capital issues, and fortify supply chains.

These measures are expected to stimulate manufacturing, support MSMEs, enhance export competitiveness, and ensure cost advantages are passed on to consumers.

Moreover, the reduction of GST on paper packaging, textiles, leather, and wood from 12-18% to 5% is set to lower production costs, enabling exporters to offer more competitive pricing.

Faster refunds and rate rationalization across textiles, handicrafts, leather, food processing, and toys will bolster MSMEs and high-demand export sectors.

The slash in GST for trucks and delivery vans from 28% to 18%, alongside reduced GST on packaging materials, will decrease freight and logistics costs, thereby enhancing competitiveness.

The reduction in GST on toys and sports goods from 12% to 5% will encourage domestic production, counteract cheap imports, and seize rising global demand.

Correcting inverted duty structures in textiles and food processing, coupled with lower GST on eco-friendly products (bamboo, bagasse, jute boards), will ensure smoother refunds, improved cash flows, and better alignment with global sustainability standards, as stated by the ministry.

The rationalization of GST is expected to diminish input costs for MSMEs and exporters, lessen inflationary pressures on consumers, and rectify structural issues such as inverted duty structures.

By alleviating liquidity challenges and streamlining refund processes, these reforms will unlock working capital, strengthen supply chains, and boost the overall competitiveness of Indian industry.

These initiatives will also promote the ‘Vocal for Local’ campaign, bolster domestic manufacturing, and support India’s aspiration to emerge as a global hub in sectors like textiles, tractors, food processing, auto components, and handicrafts, while ensuring that cost benefits are ultimately passed on to consumers.