The government has indicated that it is open to solving the problems faced by exporters due to the delay in getting refunds of Goods and Services Tax (GST), according to exporters’ apex body FIEO.
“The government is open to an alternate mechanism for the release of input credits. They may release credits on the basis of GSTR-1 and GSTR-3B and not wait for GSTR-2 and GSTR-3 to be filed,” said Ajay Sahai, Director General, FIEO, after a meeting with a government panel headed by the Revenue Secretary Hasmukh Adhia to address the exporters’ problems due to the GST. According to FIEO, exporters were expecting that the Integrated GST refund or refund of Input Tax Credit (ITC) would be available to them in August 2017 for the exports made during July 2017.
Refund hitch
However, since filing of GST Returns — GSTR-1, 2 and 3 for the month of July 2017 has been extended till October 10, October 31 and November 10, 2017 respectively — exporters will not be able to get the refund by November 2017, it said in a statement.
Such blockage of working capital will severely affect exporter’s liquidity and enhance the tax burden, it added.
If the refunds are not released by November, then working capital worth about ₹65,000 crore would be stuck, according to FIEO.
“Hence, it is suggested that IGST and ITC refund should be given on the basis of the GSTR-3B and GSTR-1 filed by the exporter. The Government should trust the trade and wherever necessary an undertaking maybe obtained for the exporter for recovery of excess/undue refund, if any,” the FIEO had said in a representation to the government.
The Confederation of Indian Industry (CII) has suggested that the Government consider special initiatives for promoting exports, including by examining certain provisions under the GST regime.
According to CII, payment of IGST for imports should be allowed to be debited under Advance Authorisation. Further, advance receipts for exports should be exempted from payment of IGST. CII highlighted that under GST rules, a manufacturer who supplies goods to an exporter for onward trade should be considered as an exporter so that GST is not applicable on interstate sales by manufacturers to export trading houses. Earlier, such manufacturer exporters had no taxes applicable on intermediate export transactions and export benefits were available.
Another important issue is that under VAT/CST, merchant exporters could purchase goods without payment of tax on furnishing of a declaration form. This provision needs to be added under the GST law. Currently, the tax for inputs for exports is needed to be paid directly even though provision for refund is provided. Further,quick refunds of IGST paid on exports would greatly help exporters, according to the CII statement.
