Easier tax refund regime for exporters in the works
The government is examining the tax refund mechanism for exporters under goods and services tax (GST) and may announce some measures over the next few days to streamline the process and speed up repayments. “Some measures are being looked at…,” a senior official told ET, adding that these could be unveiled by the weekend.
Exporters say delay in refund under GST impacts business and raises working capital cost. Last week, Finance Minister Arun Jaitley had said the government would take steps to boost exports.
The Central Board of Indirect Taxes and Customs (CBIC) has taken several steps to ease the process of refund for exporters, but some issues persist. It has had a detailed discussion with industry representatives on the issues faced by them in getting refunds seamless.
The government is now looking at all the procedures, as also execution issues at the central and state government levels, which are impacting exporters.
According to the official, it could consider some procedural relaxations to make refunds seamless and easier. The restriction on inputs imported under some exemption notifications retrospectively is in focus, the official said, adding that the government could consider restricting refund of taxes only for those exports that use inputs under some exemption notification.
Industry representatives say challenges are more on account of state tax authorities lacking familiarity with some export schemes. State officers, they said, demand different set of documents and withhold refunds even after they have been sanctioned by the Centre. This is especially so in cases of services exports.
Sometimes refunds are rejected due to minor issues such as change in the jurisdiction of officers. The jurisdiction office appearing on the GSTN portal may be different from the actual jurisdiction in the record of the department, and that sometimes leads to issues despite instructions from the CBIC that the issue should not hold up refunds.
The official said the government could look at providing a reconciliation mechanism for exporters to understand against which claims they have received the refund amount for integrated GST rebate claim.
Experts say the government must provide some new formulation to assuage exporters’ concern on refunds.
“Integrated GST refunds have streamlined largely except for internal container depots, but input tax credit refund still remains an issue,” said Ajay Sahai, director-general of Federation of Indian Export Organisations. “The government needs to address the situation expeditiously.”
Anita Rastogi, partner at PwC, said, “It is an expectation from the government to formulate a solution to eradicate the concern of businesses.
Ideally, the methodology may be prescribed where the restriction shall be applicable only on those outputs which are exported after using the inputs procured under the said notifications.”