PMO steps in to address exporters’ GST woes

Representative image

The Prime Minister’s Office (PMO) has called top officials from the finance and commerce ministries on March 12 to enable speedy clearance of exporters’ refunds under Goods and Services Tax (GST).

Exporters have been grappling with working capital constraints due to delay in refunds pertaining to Integrated GST (IGST) as well as input tax credit (ITC) on outbound shipments.

The commerce ministry has, time and again, flagged concerns regarding the delayed payments and has been working with finance ministry to set up a swift refund mechanism.

While exporters claim that only 10 percent refunds have been made by the government for ITC and 30 percent for IGST, according to the finance ministry, the central board of excise and customs (CBEC) has sanctioned refunds for 88.7 percent of the completed applications.

“Out of 5,400 cases, provisional refunds (for ITC) for only 55 applications were not sanctioned,” a senior finance ministry official told Moneycontrol.

“Till now we have refunded Rs 3,700 crore as compared with the Rs 4,172 crore claimed under completed applications,” the official quoted above said.

While tax officials blame exporters for delay in refunds for incorrectly filled details in the shipping bill or mismatch in GST returns, exporters have a different story to tell. Exporters point out the complex processes and lack of clarity on certain procedures such as absence of specific set of documents lead to rejection of their refund claims.

For instance, out of the 1,04,000 online ITC claims that were filed by exporters, only 25,000 have been accepted by the tax officals as they asked exporters to furnish too many documents including bank realisation certificates.

In the pre-GST era, the exporters would get ab-initio exemption from paying any duties. Now, under the new tax system, they are required to first pay the tax and claim refunds later, which constrained their working capital.

Under GST, they can avail 90 percent of the ITC within a week, but only after the goods are exported out of India. After verification, the remaining 10 percent has to be disbursed in six months.