No end to GST woes of exporters; govt plans another refund drive

gst-reuters

The woes of exporters continue to persist in the GST indirect tax regime. Exporters, who earlier were not subject to domestic indirect taxes, have been brought under the GST regime from last July. Since then, they have been complaining about the trouble caused by the GST, leaving them short of working capital.

"As per our estimate, refund of over Rs 20,000 crore are pending on account of IGST (Integrated GST) and ITC (input tax credit). Many exporters are not able to file the refund of ITC yet due to technical glitches,” Federation of Indian Export Organisations (FIEO) president Ganesh Gupta told reporters.

"Liquidity is a major area of concern, particularly for MSME exporters. The provision that 90 per cent of the ITC refund will be issued within seven days is not being implemented by tax authorities. Some of the states say they do not have funds to clear the refund,” he said.

Gupta further said although overall merchandise exports grew 9.8 per cent in FY18, the export performance of labour-intensive sectors such as carpet, textiles and garments, and handicrafts was not up to the mark.

Reacting to these allegations by one of the largest export federations, the finance ministry on Wednesday acknowledged that GST refunds have been a concern for both government and the trade for the past several months.

"Till now, the government has sanctioned more than Rs 30,000 crore as GST refund. This includes an amount of Rs 16,000 crore of IGST and Rs 14,000 crore of ITC," the finance ministry said in a statement released on Wednesday.

The figures of Input Tax Credit (ITC) include refunds sanctioned by both the Union and state governments. The finance ministry note said refund sanctioned by the government during May 2018 is to the tune of Rs 8,000 crore.

"Refund claims to the tune of Rs 14,000 crore (Rs 7,000 crore on the IGST side and Rs 7,000 crore on account of ITC) are pending with the government as on date, as against the figure of Rs 20,000 crore projected by FIEO," the finance ministry statement sought to clarify.

After an initial refund drive to expedite refunds to exporters was held, the government is now planning to hold a second 'Special Drive Refund Fortnight', starting from May 31, 2018 to June 14, 2018. This time, the refund drive is likely to facilitate all kinds of refund claims of traders, including refunds for customs duties.

Central and state GST officers were urged by the finance ministry to 'strive to clear all GST refund applications received on or before 30.04.2018 during the fortnight.

While all these measures provide only temporary relief, the government is also keen to provide some permanent solutions to traders' GST refund woes.

"The Central Board of Indirect Taxes and Customs (CBIC) is implementing a solution whereby the refunds held in GSTN, in cases where the exporters have mistakenly declared their export supplies as domestic supplies, would now be transmitted to Customs EDI System," Hasmukh Adhia, finance secretary said, reacting to the refund issues faced by exporters.

"On receipt of the records from GSTN, the customs system would automatically process the refunds for sanction, if no other errors are committed by exporters," Adhia said.

Matters related to refund claims by an input service distributor, composition dealer, and exports of services and supplies made to SEZ have also been clarified by the ministry by issuing separate circulars, the finance secretary said.

"All claimants may note the refund application in FORM GST RFD-01A will not be processed unless a copy of the application, along with all supporting documents, is submitted to the jurisdictional tax office. Mere online submission is not sufficient," said a finance ministry circular on the refund issue.

The ministry is encouraging GST refund claimants to approach their jurisdictional tax authority for disposal of their refund claims submitted before 30.04.2018, and which are still pending.

IGST refund claimants have been advised by the finance ministry to register on ICEGATE website to check their refund status. The refund drives apart, exporters feel that the added layers of processes would only add to their woes.

"A refund fortnight is an encouraging step. But increasing layers of complexities and forcing exporters to reach out to jurisdictional tax authorities would only increase the time and energy spent for getting hold of our refunds," said Gupta, reacting to the finance ministry steps on clearing stuck refunds of exporters.

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