At a time when the world is experiencing a rare bout of coordinated growth in the developed and emerging economies, India’s export has been lethargic. A prime culprit is sloppy switchover from the old indirect tax regime to the new one. Exporters face huge delays in getting refunds under the goods and services tax (GST) regime, and are in an ‘extreme liquidity crunch’, according to the article on this page on Wednesday by Ajay Sahai, director general and CEO of the Federation of Indian Export Organisations (FIEO). The Centre needs to promptly expedite GST refunds to exporters and revamp attendant systems; we do not export taxes and exports are anyway supposed to be zero-rated under GST. GST should not be blamed for a sliding currency as well.
One reason why refunds are stuck is mismatch of invoice details in shipping bills and GST refund (GSTR). And the reason for the lapse seems plainly procedural. If GST Network (GSTN) invoice details are required in the shipping bill, the required column space ought to have been added to the pro forma in July. As it turns out, the arrangement to include both commercial and GSTN invoices in the format has been available only since last November. Further, the Integrated GST (IGST) amount in the shipping bill, often enough, does not tally with that in the GSTR. But this is because the tax paid is on transactional value, while the shipping bill pertains to free on board value of exports. If the item with the relevant shipping bill has been exported, the IGST amount as shown in the GSTR should be promptly refunded as well.
Delays in refunds are also due to mismatch in GST returns, or, say, non-filing of local export general manifest (EGM) forms. But as GSTR and EGM are both export-linked, the different steps for tax refund and duty drawback seem avoidable. We need to simplify the rules and not change them often. A retrospective rule now says exporters pay no IGST and only provide a letter of undertaking or bond. But what of IGST already paid? GSTN and customs data do need streamlining.