In a breather, GST refund to exporter to double this week



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Updated: Jun 14, 2018, 02:10 AM IST

The refund fortnight window to clear the backlog of exporters’ claims under the goods and services tax (GST) regime could see close to Rs 14,000-15,000 crore of the pending amount being sanctioned by June 16.

However, exporters and Federation of Indian Exporters Organisation (FIEO) feel that this 15-day window may not see the over Rs 20,000-crore refund – for which claims have been filed – sanctioned as there were issues that still remain unresolved.

Ganesh Kumar Gupta, president of FIEO, told DNA Money that the fortnight refund – May 31 to June 14 – was moving satisfactorily till now and could see a record clearance of about Rs 14,000-15000 crore.

“Overall (refund fortnight has been) satisfactory. By the end of it, the refund clearance figure will be around Rs 14,000-15,000 crore because they (Central Board of Indirect Taxes and Customs) are aggressively refunding the IGST (interstate GST) claims. We will know the exact figure soon (Friday),” said Gupta.  

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This is almost double the amount cleared during the refund fortnight of March. The Central Board of Indirect Taxes and Customs (CBIC) had cleared Rs 7,000 crore then.

The data put out by the government recently showed that the GST refund sanctioned to exporters till now was Rs 30,000 crore. They said the pending claims amounted to Rs 14,000 crore, which is lower than the FIEO’s figure of Rs 20,000 crore.

Gupta said that refunds were still stuck for those who were unable to file returns due to technical glitches on the GST returns filing platform – GST Network (GSTN). Even claims – where the figures in the GST returns and refund claims were not matching – have been rejected by the CBIC.

“I am not receiving as many (exporters) complaints as before. So far, as my company or its sister firms are concerned, they have all received the refunds to the extent of 96%-97%. I believe everybody must be getting it,” added Gupta.

Ajay Sahai, director general (DG) and CEO of FIEO, revealed that exporters' refunds are still stuck due to export general manifest (EGM) errors, which he believes could result in 5% of the refund claims lying with the CBIC.

“That is an area, where we require improvement because if there are EGM errors then the refund is not processed by the customs,” said Sahai.

The EGM is filed by exporters when a ship leaves the country, which shows that there has been an export transaction.

“It (refunds related to EGM error) would be a sizeable amount. Most of those, who are exporting from inland container depot of Ludhiana, Faridabad, Bengaluru and others are affected by it,” added Sahai.

The DG of FIEO said refunds are stuck due to returns filing issues, which have persisted as “system software has not been modified so far”.

“Around 3-4 days back, they (CBIC officials) told us that they will be modifying the software in a week’s time, but it has not yet been resolved (till now),” he said.

According to Sahai, problems relating to input tax credit (ITC) refund has also further aggravated the exporters’ working capital woes. “For exporters, who are not exporting in the month in which they procure inputs – for whom the ITC claims and exports are in different months – for such exporters (working capital) problem continues.”

M S Mani, partner, Deloitte India, said the government needs to work on a “mechanism to handle refund claims which do not fully reconcile with the returns filed earlier”.

“Such differences could be on account of the initial difficulties encountered by businesses in dealing with the rapidly changing processes during the initial period. Addressing working capital blockages on account of pending refund claims would provide a big boost to the industry,” said Mani.

An exporter, who spoke on condition of anonymity to DNA Money, said a large number of refunds are stuck due to a mismatch between figures filed in GST returns in the initial phase of GST rollout and refund claims filed later.

“During the initial period of GST, companies were not clear as to how they should go about the process and the law also kept changing rapidly. The return filing timeline also kept shifting. All this lead to businesses filing returns in a hurry just to keep the deadline and avoid penalty. Later, the deadline was extended but they (exporters) had already filed returns, and you cannot refile,” explained the exporter, who spoke off the record.

“On the other hand, refund claim filing typically starts six months after the due date. By the time people filed a refund claim, there was complete clarity on what needed to be done. Now, when they (CBIC) are opening the two documents – filed on different dates – they are not matching and today there is no immediate mechanism to get this rectified,” said this exporter.

According to him, today such issues are being resolved with the intervention of the commissioners. “You have to make an application to the commissioner. They look at each number. This is a long process and is delaying the refunding,” the exporter said.

He suggested the CBIC should look at a system whereby the issue is redressed on a “process basis and not on a case-to-case basis” to hasten refunding under GST for exporters.

“I would say 30%-odd claims are stuck because of mismatches between GST returns and refund claims,” he estimated.

What Govt says

  • Rs 30,000 cr Exporters’ refund amount sanctioned  
  • Rs 14,000 cr Pending claims  
  • Rs 7,0000 cr Refund for interstate GST

What FIEO says

  • Rs 30,000 cr Pending refund claims  
  • Rs 14,000-Rs 15,000cr Likely to be sanctioned during refund fortnight