Exporters from micro, small and medium enterprises (MSME) sector are yet to get an assurance from the Goods & Services Tax Council on whether they would be exempted from paying input taxes on the final export products instead of having to seek refunds, Commerce & Industry Minister Nirmala Sitharaman has said.
There is, however, clarity now on the term "submission of complete application'' for exporters seeking refund of input taxes and the maximum time for getting refunds on 90 per cent of taxes paid stands at ten days.
“On the refund issue, our request to the GST Council was that for MSMEs, if they can still think of giving an alternative, rather than asking them to pay first and then get a refund. We are yet to hear from them,” Sitharaman said addressing a press conference on Saturday.
The GST, which seeks to subsume multiple taxes applied at the Central and State level into a single tax, is likely to be implemented from July 1.
While a decision needs to be taken on exemption for MSMEs, there is clarity now on the refund of input taxes paid by exporters.
The GST Council had earlier agreed that 90 per cent of the refund due to an exporter would be paid within seven days of submission of complete application failing which an interest of 6 per cent would be paid on the amount.
The Commerce Ministry had asked the GST Council to explain what the term `complete application’ meant.
“We were told that complete application means getting an acknowledgement from the government stating this. It has been decided an exporter’s application for refund will be responded to within three days of its submission stating whether it is completed or some queries remain. The seven-day period for getting refunds will begin after the application is acknowledged as complete,” pointed out Ajay Bhalla, Director General of Foreign Trade.
This is a substantial concession for exporters as the normal time for responding to applications is 15 days. “Subsequent to the GST Council meeting, the rules have been uploaded today,” Bhalla said.
The Commerce Ministry had sought exemption for the MSME sector from paying input taxes as small units in India are mostly cash-starved and further locking of funds could affect their operations.