West Bengal Finance Minister Amit Mitra has said with the hurried introduction of GST without putting proper infrastructure in place, the system had become more “primitive” than the VAT regime with “manual” processing of refund applications.
‘Interface lacking’
Due to lack of interface in place between the Goods and Services Tax (GST) network with the customs electronic data interchange (EDI) and the Directorate General of Foreign Trade (DGFT), the Centre is using ledger for manual records for refunds, Dr. Mitra said.
Pointing out that that this was one reason why he had asked the Centre to push back the date of introduction of the new tax regime, he hoped that the problem was temporary.
Even in the State VAT system, there was no manual intervention in the entire process of filing of returns, Dr. Mitra said while addressing the Federation of Indian Export Organisation (FIEO)-organised award ceremony here last evening.
‘Working capital locked’
The Minister said owing to the new system, exporters were unable to get their refunds and at least 10-15% of their working capital was remaining locked.
According to the report titled ‘Impact of GST on Exports’ by the Parliamentary Committee headed by Naresh Gujral, the refund of Integrated Goods and Services Tax (IGST) paid on export goods and refund of Input Tax Credit (ITC) on goods exported under Letter of Undertaking (LUT)/ Bond in July, August, and September, 2017 was still pending, the Minister said.
The Committee notes that a sharp liquidity crunch had gripped the majority of exporters due to the blocking of funds, Dr. Mitra said.
“The delay in disbursing refund means your capital is blocked.
“The Committee’s report said the (quantum of) blocked capital (stuck up with the government for refunds) could be between 15-20% of the working capital. Declining working capital would lead to losing of jobs by the workers,” Dr. Mitra pointed out.
“There are job losses due to lower business in gems and jewellery sector, I am also deeply concerned for the SME (small and medium enterprises) and the unorganised sectors which is cash-based,” Dr. Mitra said.
Export growth
Despite GST-related hurdles, Dr. Mitra was optimistic about the overall growth of exports from West Bengal.
In 2016-17, exports from the State were worth ₹53,649 crore and it was expected to touch ₹75,000-80,000 crore in 2019-20, Dr. Mitra said.
Some 10 items account for almost two-thirds of the total exports with jewellery, fisheries and leather figuring among the major items of export from the State of West Bengal.
