GST export refund: PM to meet top finance officials on delay, procedural issues

GST export refund: PM to meet top finance officials on delay, procedural issues

The Prime Minister’s Office (PMO) has called a meeting of top officials of the commerce and finance ministries on Monday to address the problem of GST export refund. The officials will discuss problems faced by traders in electronic filing. Traders have complained that they are unable to provide some of the info required while submitting the details in GSTN (Goods and Services Tax Network). The delay in exporters’ refund under the Goods and Services Tax (GST) has turned into a serious problem with around Rs 10,000 crore stuck with the government, making many exporters, especially the smaller ones, struggle for working capital. Out of Rs 14,000 crore, only Rs 4,000 crore worth of refunds have been released so far.

The new tax regime was rolled out in July 1, 2017, but 70 per cent of the exporters’ refunds have not been cleared yet. The Revenue Department says some errors have been found in forms submitted by exporters with the customs and the GSTN. The officials will thoroughly discuss the overall impact of the delay in refund for exporters and manufacturers. There are problems both at the GST authority’s level, and at the level of taxpayers, say experts, adding that a part of the delay is caused by a slow roll-out of the GST returns process.

“A part of the slow deployment of the overall GST returns process has been due to non-availability of refund module (RFD-01) on the GST common portal, making the standard process for refund claims not possible,” William Rau , Senior Director – Engineering, Avalara, a technology company that focuses on GST compliance automation. However, the biggest cause of the delay, experts say, is the error in filings.

Around Rs 10,000 crore stuck with the Central Board of Excise and Customs (CBEC) could be released only after the discrepancies in the details provided by exporters in the GSTN – while filing up the forms GSTR 1 or Table 6A or GSTR 3B – and the shipping bill details with the Department Of Customs could be addressed. According to the GST rules, a shipping bill filed by an exporter should be deemed to be an application for refund once both GSTR-1 and GSTR-3B are filed correctly. “The refunds are being stopped for even a mistake in putting a full stop. If there is mistake even due to rounding off of figures, the system would not allow refunds,” says Rajat Mohan, Partner, AMRG and Associates Chartered Accountants.

Monday’s meeting would be attended by Finance Secretary Hasmukh Adhia, Commerce Secretary Rita Teaotia, CBEC Chairperson Vanaja Sarna and top officials from the Directorate General of Foreign Trade (DGFT), the PTI reported citing sources. The DGFT, under the Commerce Ministry, is slated to make a presentation before the Principal Secretary to the Prime Minister on the pending refunds to exporters.

The GST Council in October last year had said that an e-wallet mechanism for refunds to exporters would be developed and had entrusted the DGFT to prepare required norms for the implementation from April, 2018. Under the e-wallet mechanism, a notional credit would be transferred to the exporters account based on their past record and the credit can be used to pay taxes on input. Exports during April-January 2017-18 grew by 11.75 per cent to USD 247.89 billion as against USD 221.82 billion in the year-ago period.

Some experts are saying the government is only talking about the delay in refunds (to the tune of Rs 10,000 crore) in the cases where taxes have been paid, but no one is talking about the delay in getting input credits to exporters where taxes have not been paid. This amount is said to be another Rs 10,000 crore, which also remains unpaid.