The GST Council will soon offer relief to the beleaguered exporters as they continue to reel under liquidity issues post implementation of the Goods and Services Tax (GST).
The Committee on Exports headed by Revenue Secretary Hasmukh Adhia today met eight export promotion councils to hear out their recommendations and formulate a suitable strategy to aid the sector grappling with issues post July 1.
The Committee primarily took up the issue of the delay in GST refund to exporters and a consequent blocking of working capital that has negatively impacted their liquidity, thereby escalating their tax burden.
Small and medium exporters are being hit due to a delay in refunds, with the government extending the deadline for filing tax return forms GSTR1, GSTR2, GSTR3 due to technical glitches on the IT portal Goods and Services Network (GSTN).
Exporters have sought a provisional refund on the basis of the tax summary form GSTR3B and GSTR1 (return for outward supplies) forms.
“We suggested we can get refund on the basis of GSTR1, GSTR2, GSTR3 to be filed. If we can get a refund on the basis of GSTR1 and GSTR 3B because at the consolidated level they capture the value of exports in a month, the input tax credit available, and integrated GST paid. If you (the government) accept that, then you can provide the refund on provisional basis when actual GSTR1, GSTR2, GSTR3 will be filed. Little adjustments can take place,” Director General of Federation of Indian Export Organisation (FIEO) Ajay Sahay said.
Exporters fear that working capital cost may touch up to Rs 65000 crore till December.
“If refund is not flowing for the export sector till December, we will have to pay for GST for July, August, September, October, then total refund which will be close up to Rs 60000-65000 crore,” Sahai said.
A decision on the exporters’ recommendation is yet to be taken and a final decision will be taken soon, a senior government official told Moneycontrol.
Central Board of Excise and Customs (CBEC) Chairperson, CBEC Member (Customs), DGFT, Commerce Secretary, GST Council Additional Secretary, Director General, Export Promotion, from the central government and revenue department officials were present at the meeting.
In the pre-GST era, exporters would get ab-initio exemptions from duties, as per various schemes under the foreign trade policy. With the implementation of the new indirect tax system from July 1, exporters will now have to pay the duties first, while importing the raw material and seek refund after the finished good is exported.
As a result of this process, about Rs 1.85 lakh crore will get stuck with the government, as per industry estimates..
According to Federation of Indian Export Organisation (FIEO), exporters have stopped taking orders with least or no working capital at their disposal due to blockage of funds under GST and uncertainties looming large on refunds for the months of July to October, 2017.