New Delhi:Central Board of Indirect Taxes and Customs (CBIC) has launched a tax refund drive in the first fortnight of June and issued instructions to swiftly settle refund claims of exporters that are held up because of mismatches in the returns filed by them.
The move is meant to streamline the new indirect tax regime and improve the cash flow of exporters who have been complaining that refund delays make them less competitive.
CBIC has been trying to reduce refund delays but mismatches in the returns filed by exporters are a key hurdle.
The changes in refund processing procedure and the refund drive from 31 May to 14 June are expected to address this.
Exporters welcomed the move. The move will especially help exporters who were not getting refunds because of mismatches in goods and service tax (GST) returns, said Ajai Sahai, director general and chief executive officer at Federation of Indian Exports Organisations (FIEO).
A circular issued by CBIC to field officers, dated 28 May, specified the procedures to be followed for processing the refund claims of exporters under different scenarios.
It noted that exporters have inadvertently erred in declaring the integrated GST (IGST) paid on exports as IGST paid on interstate domestic supplies while filing their summary tax returns. Some exporters also short paid taxes against the liability declared in their sales returns.
As a result of these mismatches, refunds could not be processed.
“A mechanism has now been set up to facilitate flow of information from the customs department to GSTN (GST network) to address any mismatches in returns. But a few more issues remain to make the refund process more seamless. There is a need to modify the software to claim input tax credit refund, which is a work in progress. Also, refund for shipments cleared without manual intervention needs to be looked into to,” said Sahai.
A statement from the finance ministry said refund claims to the tune of Rs14,000 crore are pending with the government as on date, which includes both input tax credit claims as well as IGST refund claims.
“GST refund has been a concern for both the government and trade for the past several months,” said the statement.
Till now, the government has sanctioned more than Rs30,000 crore as GST refund, including Rs16,000 crore of IGST and Rs14,000 crore of input tax credit.
“The ‘refund fortnight’ drive would facilitate all types of refund claims in which customs, central and state GST officers will strive to clear all GST refund applications received on or before 30 April 2018,” it said.
Another circular on refunds issued under the Central GST (CGST) Act clarified that the refund of accumulated credit of GST compensation cess will also be granted to exporters along with the refund of accumulated credit of CGST, state GST and IGST even if the end product does not attract compensation cess.
Pratik Jain, partner and leader of indirect tax at PwC said this will help a number of exporters who use inputs that attract GST compensation cess but there is no cess liability on their output.