94% of GST refunds to exporters amid input tax credit concerns

Pending GST refund claims of Rs 54 bn being processed expeditiously: Ministry

The finance ministry on Thursday said that 93.8 per cent of GST refunds of exporters have been issued as on October end this year. The statement came amid exporters raising concerns about their input tax credits.

The ministry re-assured exporters for the second time in a month there is no let-up in the sanction of GST refunds.

It said in a statement that the total GST refunds to the tune of Rs 827.75 billion have been disposed by the Central Board of Indirect Taxes and Customs (CBIC) and the state authorities of the total refund claims of Rs 881.75 billion received so far.

“The pending GST refund claims amounting to Rs 54 billion are being expeditiously processed so as to provide relief to eligible exporters. Refund claims without any deficiency are being cleared expeditiously,” the ministry said.

There are two kinds of refunds when it comes to GST: The input-tax credit that an exporter claims since exports are zero-rated, and the refund of Integrated GST (IGST) to take back the tax paid on imports for the purpose of exports.

The ministry said about 93.27 per cent (Rs 429.35 billion) of the total IGST refund claims of Rs 460.32 billion transmitted to customs from GSTN as on October 31, 2018 have already been disposed. The remaining claims amounting to Rs 30.96 billion are held-up on account of various deficiencies, which have been communicated to exporters for remedial action.

Exporters said they are not worried about IGST refunds. They said that the online process for claiming IGST refunds is robust. However, when it comes to claiming the input-tax credit (ITC), exporters expressed concerns.

The ministry said orders have been issued for input tax credit worth Rs 346.02 billion of the total claims of Rs 421.45 billion as on October end. Refunds worth Rs 1.59 billion are pending with the Centre and Rs 21.46 billion with the states.

The respective GST authorities have issued deficiency memos for the rest of the Rs 52.39 billion.

Ajay Sahai, director general & CEO of the Federation of Indian Export Organisations (FIEO), also said, “The CBIC disposes the refund claims they receive, but in case of ITC, many applications do not reach the right authorities due to deficiency in applications.”

Exporters claim that they have to resort to printed applications and have to submit it to tax authorities by hand, which makes the process tedious. Sahai said the value of refunds not settled because of deficiency might not be high, but the number of exporters whose refunds are pending is disproportionately high.

“Small exporters are the worst-hit when it comes to unsettled refunds,” he added.

GST officials said after the refunds are sanctioned by the CBIC, the Pay and Accounts Office (PAO) in the office of the controller of accounts is obligated to disburse the refund to the beneficiary. Some refunds get stuck at this stage, they said.

While the sanction of refunds pertains to those done by the CBIC, the actual refund amount disbursed by the respective pay and account offices at the central and state levels is not yet available.