Scheme to speed up Rs 600 crore tax refunds to exporters on cards
ET Bureau|
Updated: Sep 23, 2017, 01.10 AM IST
NEW DELHI: Exporters would be able to get their pending refunds of Rs 600 crore soon even as a new scheme to facilitate speedier reimbursement of taxes paid on inputs is being worked out, dismissing claims of of thousands of crores stuck in refunds.
The government also allayed concerns over reports that taxpayers have claimed Rs 65,000 crore of tax credit for central excise and services in pre-GST period and government revenues will take a hit..
Finance ministry issued two separate statements on Friday putting out the exact situation in respect of these two issues. Exporters had in a representation to the government claimed that Rs 65,000 crore could get stuck by the end of October if duty refunds to not start flowing immediately.
The finance ministry said there were 'wild estimates' and for two-thirds of exports by value there is no blockage of funds, adding that problem is not as grievous as is being made out.
"Duty drawback scheme was actually extended in the post-GST regime for a period of three months, i.e. up to September 30, 2017, subject to that exporter not taking input tax credit under GST. This means that as of now, for 66% of the value of exports, there is no blockage of funds," the statement said.
A senior finance ministry official said the amount stuck is about Rs 600 crore. "Government is working on scheme that should be legally tenable and financially bearable," said the official.
The scheme would allow exporters to get their refunds in three days. The GST Council is expected to take up the issue on its October 6 meeting. "We are trying to find a way of giving refund by linking form GSTR 1 with form GSTR 3B and, therefore, for the month of July, where form GSTR 1 is already filed, the authorities would be in a position to process the refund applications," the statement said.
"Therefore, the exporters, who have not yet filed form GSTR 1 for July 2017, may be advised to file it immediately and not to wait till the deadline," the statement said adding that the GSTN application for refund is also getting ready.
"But, in the meantime, we are also finding other ways of giving refund, if necessary through a manual procedure," it said.
TRANSITION CREDIT CLAIMS
The official said tax authorities were only verifying transition credit claims and not going after businesses after it emerged that as much as Rs 65,000 crore out of the about Rs 95,000 crore tax collections in July — the first month of GST —had been claimed as transitional credit by taxpayers.
The high claim had also led to apprehensions that the government would not have much left after these claims are adjusted.
The Goods and Services Tax (GST) regime, which kicked in on July 1, allows a tax credit on stock purchased during the previous tax regime. This facility is available only up to 6 months from the date of GST rollout.
The finance ministry issued a statement to allay concerns about high transitional credit claims saying that the Centre's revenue kitty will not go down because of these claims, offering three explanations.
This figure of transition credit claimed is also "not incredibly high" since Rs 1.27 lakh crore of credit of Central Excise and Service Tax was lying as closing balance as on June 30, 2017, the statement said.
It said the credit claimed by taxpayers in the TRAN-1 form does not mean that they would have used all of this credit for payment of their output tax liability for July 2017.
Secondly, it may be clarified that an amount of Rs 95,000 crore, which was received in the month of August 2017 for GST, is the amount actually paid in cash other than availing credit, it said.
Thirdly, this figure of transition credit claimed is also not incredibly high, since Rs 1.27 lakh crore of credit of Central Excise and Service Tax was lying as closing balance as on June 30, 2017 as per department's record.
Also, some of the credits, which are claimed in TRAN-1 form may be under litigation and therefore, it may not be available to the assessee to carry forward or for utilisation. "It is from this angle that CBEC is examining the transition credits, which are claimed by assessees in TRAN-1 form in certain cases," the ministry said.
The statement said some assessees would have committed a mistake in filing the form and hence the government will allow facility of revision of TRAN-1by the middle of October.
The GST Council has already extended by a month the date for filing TRAN-1 form till October 31.
The government also allayed concerns over reports that taxpayers have claimed Rs 65,000 crore of tax credit for central excise and services in pre-GST period and government revenues will take a hit..
Finance ministry issued two separate statements on Friday putting out the exact situation in respect of these two issues. Exporters had in a representation to the government claimed that Rs 65,000 crore could get stuck by the end of October if duty refunds to not start flowing immediately.
The finance ministry said there were 'wild estimates' and for two-thirds of exports by value there is no blockage of funds, adding that problem is not as grievous as is being made out.
"Duty drawback scheme was actually extended in the post-GST regime for a period of three months, i.e. up to September 30, 2017, subject to that exporter not taking input tax credit under GST. This means that as of now, for 66% of the value of exports, there is no blockage of funds," the statement said.
A senior finance ministry official said the amount stuck is about Rs 600 crore. "Government is working on scheme that should be legally tenable and financially bearable," said the official.
The scheme would allow exporters to get their refunds in three days. The GST Council is expected to take up the issue on its October 6 meeting. "We are trying to find a way of giving refund by linking form GSTR 1 with form GSTR 3B and, therefore, for the month of July, where form GSTR 1 is already filed, the authorities would be in a position to process the refund applications," the statement said.
"Therefore, the exporters, who have not yet filed form GSTR 1 for July 2017, may be advised to file it immediately and not to wait till the deadline," the statement said adding that the GSTN application for refund is also getting ready.
"But, in the meantime, we are also finding other ways of giving refund, if necessary through a manual procedure," it said.
TRANSITION CREDIT CLAIMS
The official said tax authorities were only verifying transition credit claims and not going after businesses after it emerged that as much as Rs 65,000 crore out of the about Rs 95,000 crore tax collections in July — the first month of GST —had been claimed as transitional credit by taxpayers.
The high claim had also led to apprehensions that the government would not have much left after these claims are adjusted.
The Goods and Services Tax (GST) regime, which kicked in on July 1, allows a tax credit on stock purchased during the previous tax regime. This facility is available only up to 6 months from the date of GST rollout.
The finance ministry issued a statement to allay concerns about high transitional credit claims saying that the Centre's revenue kitty will not go down because of these claims, offering three explanations.
This figure of transition credit claimed is also "not incredibly high" since Rs 1.27 lakh crore of credit of Central Excise and Service Tax was lying as closing balance as on June 30, 2017, the statement said.
It said the credit claimed by taxpayers in the TRAN-1 form does not mean that they would have used all of this credit for payment of their output tax liability for July 2017.
Secondly, it may be clarified that an amount of Rs 95,000 crore, which was received in the month of August 2017 for GST, is the amount actually paid in cash other than availing credit, it said.
Thirdly, this figure of transition credit claimed is also not incredibly high, since Rs 1.27 lakh crore of credit of Central Excise and Service Tax was lying as closing balance as on June 30, 2017 as per department's record.
Also, some of the credits, which are claimed in TRAN-1 form may be under litigation and therefore, it may not be available to the assessee to carry forward or for utilisation. "It is from this angle that CBEC is examining the transition credits, which are claimed by assessees in TRAN-1 form in certain cases," the ministry said.
The statement said some assessees would have committed a mistake in filing the form and hence the government will allow facility of revision of TRAN-1by the middle of October.
The GST Council has already extended by a month the date for filing TRAN-1 form till October 31.
