The government has liability worth Rs.20,000 crore in Goods and Services Tax (GST) refunds to exporters across the country according to the Federation of Indian Export Organisation (FIEO). The organisation also noted that this has created liquidity crisis for exporters. More than half the GST refund owed to exporters is stuck in the form of Input Tax Credit (ITC).
The apex exporter body noted that the finance ministry has cleared refund claims worth Rs.7,000 in March. In April, the government’s tax refund liability was about Rs.1,000 crore. As of now, the organisation estimates the refund liability at Rs.20,000 crore, which includes integrated GST (IGST) and ITC. It also noted that the refund process has become considerably slower following the clearance fortnight.
According to FIEO president Ganesh Kumar Gupta, many exporters were unable to file for ITC refund due to technical glitches in the platform. Since the ITC and exports happened in different months, the technical glitch does not allow exporters to file for immediate refunds. Moreover, the partly electronic and partly manual nature of the ITC refund process makes the task even more difficult.
Issues in the refund process have also been attributed to mismatches of invoice numbers in shipping bills and GST return forms. Moreover, shipping and airline companies do not submit the proof of export to customs on time.
Despite the issues in getting the GST refund, FIEO reported that India’s overall exports for the current fiscal year are likely to increase 16% to $350 billion from $300 billion in the previous fiscal year.
Following the GST rollout in July 2017, manufacturing sector slowed down temporarily resulting in a decline in labour-intensive sectors such as leather, gems, handicrafts, apparel, etc. This effect was witnessed till April. In addition to this, the liquidity issue caused by GST refund delay could also have an impact on the country’s export growth for this year.