Cosmetics importers can claim refunds on excess GST

Cosmetics industry in India can breathe a sigh of relief as they can now claim refunds under GST (Goods and Services Tax) on the goods imported at a higher tax rate and remain unsold since revision of the tax, a government body said.

The announcement comes a month after the GST council in its last meeting decided to slash the tax rates on cosmetic items from 28 percent to 18 percent. The decision would have caused losses to retailers who had imported cosmetics at 28% Integrated Goods & Services Tax (GST) rates during inbound shipments.

The government’s decision will allow retailers to claim a refund of excess tax paid on items that are now retailing at 18% post revision in the tax slab.

 “We have told importers that if they have imported goods at 28% and are selling them at 18%, they can claim a refund,” a senior official at the Central Board of Excise and Customs (CBEC) was quoted as saying by the Economic Times. “They will, however, have to submit proof," he added.

“The reduction in GST rates for products imported at a higher rate may have some short term working capital impact on the importer. However, this can be adjusted against future sales,” said Lalit Malik, chief financial officer at Dabur, which operates cosmetic retail chain NewU.

The refund facility will be valid until December 31 for all cosmetic goods that were imported and manufacture locally this year.

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