Exporters still waiting to receive Rs 60-bn input tax credit refunds: FIEO

Unpaid input tax credit constitutes the majority of refunds under the IGST part of the new tax regime

Technical difficulties and unwilling state tax departments have led to exporters nationwide still waiting to receive an estimated Rs 60 billion worth of input tax credit refunds.

While difficulties in the filing process continue to persist, many small and medium scale exporters are being denied tax refunds by state governments who say they are cash starved, according to apex exporters body, the Federation of Indian Exports Organisations (FIEO).

Unpaid input tax credit constitutes the majority of refunds under the Integrated Goods and Services Tax part of the new tax regime. “Almost 40 per cent of all refund seeking exporters have not been able to submit their applications. This totals about 1,16,000 people across the country,” FIEO Director General Ajay Sahai said.

Getting states to pay up their share of the levy has also been difficult. States such as Andhra Pradesh, Uttar Pradesh, Bihar and Chhattisgarh have said they are out of funds to pay exporters, FIEO said.

“West Bengal and Uttar Pradesh are among the worst performers. the rate of acceptance of applications is a paltry 5 per cent in Maharashtra and only 10 per cent in Delhi,” an industry insider said. FIEO had asked the government to remove the requirement for physical verification of documents that it says add to the transaction time & cost of exporters.

Roundabout Process

The industry’s pet peeve has been that the slow pace of government disbursal and procedural glitches in the GSTN portal make the process of claiming the refunds a strenuous one. However, commerce ministry officials claim that one of the main reasons behind the stuck refunds is that many traders have not been able to file in the correct manner.
 

an exporter has to first file an application online after which his cash ledger is debited. he then has to take a physical printout of the transaction and file with the tax authorities. but the overburdened tax authorities are generally not willing to accept the same quickly. "this is because current rules stipulate that from the day of acceptance of the physical copy, within the next 7 days, at least 90 per cent of the tax refunds have to be released," Sahai added.

Since many tax departments across the country have claimed they are running low on funds to pay back exporters, lower level officials have on many cases turned down legitimate claims, exporters allege.

"We have received a demand for putting the ITC claims on a fully automatic route and are assessing it. we will incorporate all such suggestions before going for a further streamlining of the export refund mechanism in the GST," a commerce ministry official said.