India’s exports likely to be hit in November again as delayed GST refunds hit exporters

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The government still owes exporters at least Rs 50,000 crore in Goods and Services Tax refunds since July, and this could hit India’s export figures again in November, the Business Standard reported on Monday. Exporters said they can no more take fresh shipment orders and are laying off workers amid the liquidity crunch.

Before the introduction of the GST, exporters enjoyed upfront tax exemption, since exports were “zero-rated” or exempt from tax. In the new tax regime, however, they need to pay taxes on the goods they manufacture or purchase. These taxes can be claimed as refunds only after the goods have been exported out of India.

“It’s an alarming situation,” the Federation of Indian Export Organisations’ Chairman (south India) A Sakthivel told Bloomberg. “Our working capital is stuck, we’re losing revenues and now we’re having to let workers go.”

“The government has released a very small amount for July, and that too the IGST [Integrated Goods and Services Tax] refund,” Business Standardquoted Ajay Sahai, chief executive of the federation, as saying. “Exporters have paid tax for four months. And the IGST refund that has begun is only for July. The ITC [input tax credit] is still not operational.”

Input tax credits form a large part of GST refunds, but are yet to be released to exporters. Out of the Rs 750-crore refund claims for IGST for July, only about Rs 350 crore has been refunded. About Rs 200 crore worth of refund claims were invalid, an unidentified government official told the newspaper.

The official told Business Standard that the process of refunds was ongoing, and the delay was because the GST Network did not have a refund form on time.

On October 6, the Goods and Services Tax Council – the top decision-making body for the new tax regime – announced that refunds owed to exporters for July will be cleared by October 10, and for August after October 18. On October 8, Revenue Secretary Hasmukh Adhia had assured exporters that all refunds would be paid by November-end.

In October, India’s exports had declined for the first time in over a year, and were down 1.1% on year at $23.1 billion.

Source : https://scroll.in/latest/859407/indias-exports-likely-to-be-hit-in-november-again-as-delayed-gst-refunds-hit-exporters

 

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