Pending GST refunds, technical glitches continue to hold up exports

Uncertainty over tax refunds worth Rs 50,000 crore remains the most pressing issue

Five months after the roll out of the goods and service tax (GST) regime, exporters have pointed out that last mile, procedural issues continue to plague the sector due to the yet-to-be-updated filing systems and poor on-ground implementation of norms.

Difficulties in filing for export refunds and a plethora of new regulations and changing norms which continue to make the process of exports difficult, the Federation of Indian Exports Organisations (FIEO) have informed the Commerce and Industry Minister Suresh Prabhu.

They have also pointed out that most issues still revolved around the unreleased tax refunds under GST-the most pressing issue among exporters. A staggering Rs 50,000 crore worth tax refunds are yet to be released by both the Centre and state governments, FIEO has said

"Exporters are absolutely in dark to know the status of their pending claim. The response given by the customs authorities is also very limited. It is, therefore, essential that a facility to view the status of refund may be provided so that the exporters are aware of the stage of refund and deficiency, if any." FIEO President Ganesh Kumar Gupta said.

He added that the port-wise breakup of pending refunds should also be made available in line with the system in place for pending duty drawbacks.

In a recent interaction with Business Standard, Prabhu said that he has taken up the refunds issue with the Finance Ministry also pointing out that a long-term solution needed to be brought out to reduce the time period between the payment of taxes and the starting of the refunds process.

This is expected to bring down India's exports in November as exporters in a number of sectors such as apparel and engineering, among others, have been able to accept significantly fewer orders over the past three months.

India's exports dipped for the first time in 15 months in October falling 1.1 per cent. Last month's trade deficit widened the most in three years to $14 billion.

On Wednesday, the Finance Ministry said in a notification that it has received Integrated GST refund claims worth Rs 6,500 crore in the first four months of the GST rollout. "Refund claims of IGST paid for exports made in August, September and October 2017 are being sanctioned seamlessly wherever returns have been accurately filed," it further added.

On the other hand, a senior Finance Ministry official pointed out that claims are not being filed with proper forms and matching shipping bills. He added that businesses can upload the final sales return for August in GSTR-1 on the GST Network (GSTN) portal from December 4.

Faced with an acute shortage of funds owing to a lack of working capital, exporters are unable to file claims for the month of August under Table 6A due to technical glitches.

"For the month of August, exporters are still not able to file Table 6A as initially. there was an error. Exporters have, however, already filed the GSTR-1 form for July."

In a number of cases, refunds have not flown into traders' accounts as shipping and airline operators did not file the online Export General Manifest properly. FIEO has demanded a system be worked out whereby traders are not penalised for any acts of omission by the logistics firm.

“It is certainly good that the government acknowledges the delay in refunds. While the substantial reason for facing problems in the filing of data is not known, the government should look into the matters when the delay is for other reasons, if at all. It is hoped that the issues are addressed pragmatically to bring the export sector back on the growth trajectory,” said Abhishek A Rastogi, Partner at legal firm Khaitan & Co.

This is resulting in the refund settlement and exporters asking for a re-credit, T S Bhasin, Chairman of Engineering Exports Promotion Council said. But in the process, precious time is lost. For instance, for July, the re-credit would be paid along with August claims and thus the refunds keep on accumulating, he added.

Also, FIEO President Ajay Sahai pointed out that the process for clearing pending input tax credit hasn't even started yet.

Merchandise traders are also unable to file claims in some cases unable to file it as application forms such as the RFD-01A' application form is not available/activated on the GST common portal, FIEO said.

STORY: IN BRIEF

• FIEO has pointed out the centre and state governments are yet to release more than Rs. 50,000 crore of GST refunds

• Even as the industry faces a crippling liquidity crisis, technical issues have held up the claiming of refunds.

• Traders have told the Commerce Ministry that late or filing of Export General Manifesto by shipping or airlines have held up refunds

• For claiming input tax credit, application forms such as RFD-01A' is not available/activated on the GST portal.

• Exports fell for the first time in 15 months in October, going down 1.1 per cent.