GST Council approves refund of exporters' duty claims within ten days

The Council is yet to decide on exempting MSME exporters

The Goods and Services Tax (GST) council have accepted the Commerce Ministry's suggestion of refunding 90 per cent of exporters' claims on incentive schemes within the first 10 days.

However, the Council which had met till Friday in Srinagar, is yet to take a decision on the issue of allowing a different mechanism for exporters from the Medium Small and Micro Enterprises (MSME), Commerce and Industry minister Nirmala Sitharaman said on Saturday.

The Ministry had argued for exempting the sector from paying duties since it would be difficult for such firms to go without crucial working capital for long.

"On the refund issue, our request to the GST Council was that for MSMEs, if they can still think of giving an alternative, rather than asking them to pay first and then get a refund. We are yet to hear from them," Sitharaman said addressing a press conference on three years of the government.

Exporters are now allowed duty-free import of input goods that go into the manufacturing of export products. However, under the GST regime, which is expected to be rolled out by July 1, they will have to pay the duty upfront and apply for refunds later.

Subsequently, they had argued that significant working capital would, therefore, be locked up under this system.

While the government had earlier promised that the duty would be refunded within the first seven days of submission of complete application, it has now added a further step of acknowledging each claim within three days of that period, the Director General of Foreign Trade Ajay Bhalla said.

Provisions have been made for additional refunds 6 per cent if payments are late. The last 10 per cent of refunds would be subject to verification done by the revenue department.

The issue was referred to the GST Council by a special three-member committee including Commerce Secretary Rita Teaotia, the head of the committee on duty drawbacks, G K Pillai, and a finance ministry official.

It had also raised another issue. It is that under the GST if exempt goods become inputs for products used finally for exports, export credits will not be provided for those products.

In other matters, Sitharaman said that the government was mulling the creation of spice development agencies at the state level to boost the working of the spices board. On this note, it is also looking at spice development parks in Telangana and other states.