PMO steps in to speed up GST refunds for exporters

The GST Council on Saturday is expected to extend the date for IGST exemption and cess on imports

Taking note of slowing exports growth, the Prime Minister’s Office (PMO) has called a meeting of key officials from the ministries of finance and commerce to expedite clearance of exporters’ refunds for the goods and services tax (GST).

The Department of Commerce has strongly demanded clearance of exporters’ refunds to address their working capital issue impacting India’s outbound shipments.

“The PMO has finally stepped in to resolve exporters’ concerns under the GST, with the commerce ministry and the finance ministry on different pages on the matter.

The exports should not suffer because of administrative loopholes,” said a senior government official.

Exporters claim only 10 per cent of refunds has been made by the government for input tax credit and 30 per cent in case of the integrated GST (IGST).

These claims have been contested by the finance ministry.

According to the Central Board of Excise and Customs, the nodal department for the GST implementation, 88.77 per cent of refunds have been disbursed for input-tax credit claims.

“Of the Rs 4,100 crore claimed under completed applications, we have already refunded Rs 3,700 crore,” said a finance ministry official.

India’s exports growth slowed to 9.07 per cent in January from 12.03 per cent in December.

More than 6 per cent growth was on account of petroleum products. The labour-intensive sectors such as garments, carpets, and handicrafts showed negative growth.

“Labour-intensive sectors are facing extreme liquidity crunch because of funds getting blocked under the GST.

"Banks have also tightened lending after the Nirav Modi case. Advance tax and other deadlines are approaching as well,” said Ajay Sahai, secretary general, Federation of Indian Export Organisations.

He added a large section of micro and medium exporters are affected, prompting them to lay off workers in some cases.

Sahai said input tax credit refund requires manual filing. After filing applications electronically on the GST Network portal, the credit ledger is debited for which an exporter takes refund from the government.

That requires taking a print out and submitting it manually to the tax authority in the jurisdiction.

The tax officer has 15 days time to acknowledge the submission and issue provisional refund of 90 per cent within the next seven days.

After verification, the 10 per cent has to be disbursed within six months.

While the government is claiming the exporters are not coming forward and submitting the print outs of the filing with correct documentation, the exporters say the authorities are refusing to accept the manual filings.

“We are issuing whatever applications are coming to us, duly filled with documentation in place.

"There may be a lack of awareness among exporters that they are not doing the manual submission part,” said the finance ministry official.

The exporters however pointed out that of the 104,000 online claims filed only 25,000 have been accepted by the tax authorities.

“The tax authorities are not acknowledging applications. They are asking for a slew of documents not even mentioned in the GST rules,” argued an exporter.

According to the rules only the statement of exports in required.

“The tax authorities are asking for varied documents like proof of exports realisations, for which the central bank gives nine months, suppliers’ duty documents, etc. There is no end to it,” he added.

Sahai said, “For the time being, they need to streamline the refund process and to migrate to the EDI platform over time so that the physical interface between the exporter and the tax officer is avoided.”

The GST Council on Saturday is expected to extend the date for IGST exemption and cess on imports for export-oriented units and those possessing advance authorization-licences under the Export Promotion Capital Guarantee Scheme beyond March 31.

Merchant exporters may be allowed to continue paying the nominal GST at the rate of 0.1 per cent for procuring goods from domestic suppliers for exports.

Photograph: Aly Song/Reuters