Cloud over e-wallet for exporters, mechanism may miss April 1 deadline

Industry and govt had hit upon the mechanism more than four months ago, as a way to tide over the liquidity crunch faced by traders

A little more than four months after its announcement, the proposed e-wallet mechanism to help exporters pay the goods and services tax (GST) has seen little progress and could miss its April 1 deadline, senior government and business sources said.

Exporters had suggested the mechanism to the finance ministry as a way out of the liquidity crunch they were in since the GST roll-out last July. The mechanism was adopted at the 22nd GST Council meet on October 6, with an April 1 deadline.

That target was likely to be missed because a workable model of an online transaction platform was yet to be created, an official said. Once that is done, it will have to be tested and that will take more than a month.

Labour-intensive sectors, especially in engineering goods and textiles, continue to suffer. Bodies representing small and medium scale companies have repeatedly told the commerce ministry that they have had to forgo orders.

In a mid-January letter to the Federation of Indian Export Organisations (FIEO), the finance ministry has stated that ~19.23 billion had been given out as refunds till end-December. Claims for refunds are much more and are pending.

The e-wallet is expected to ease the situation, with notional credits being assigned to each exporter’s account. These credits can be used to pay the GST and the amount in a wallet is replenished when exporters receive their refund.

This will stay with the exporter and will help in freeing the flow of working capital.

Several problems in filing for refunds are yet to be resolved. Exporters also claim that problems in filing electronically persist, as some declarations, which are legally difficult to provide, are being insisted upon by the tax authorities.

For example, exporters are required to declare that they have not or will not claim duty drawback. However, many have already done so, as the rules had allowed them. Exporters wait for the correction in the RFD-01 declaration because they fear they could be indicted for mis-declaration.

“We have asked them to amend the declaration, which they have not done. Exporters aware of proper procedures have not been able to file applications,” said Ajay Sahai, director-general of the FIEO.

After the GST was imposed, duty drawback may only be used for Customs duty refunds on inputs used, not for excise purposes.

Exporters that have filed the applications have not been able to submit manual copies required to complete the process. “Of the 80,000 applications submitted till a fortnight ago, only 3,900 are manual applications,” Sahai added.

Multiple exporters alleged the tax authorities were refusing to accept these, claiming they had not been instructed to do so, while some officials were seeking bribes to accept applications.