Special drive to clear GST refunds from today

The Finance Ministry has announced a special refund drive from Thursday to expedite Goods and Services Tax (GST) related refund claims from exporters. The drive will continue till June 14.

The announcement has come at a time when exporters have alleged that there were refunds of over ₹20,000 crore pending on account of IGST (Integrated Goods & Services Tax) and ITC (Input Tax Credit).

A statement from the Ministry said refunds of GST have been a concern for both the Government and trade for the past several months. So far, a total of ₹30,000 crore have been sanctioned to clear the dues. “Contrary to the press reports that there has been a dip in refund sanction after the first Refund Fortnight in March 2018, the refund sanctioned during May is to the tune of ₹8,000 crore. Refund claims to the tune of ₹14,000 crore (₹7,000 crore on the IGST side and ₹7,000 crore on account of ITC) are pending with the Government as on date, as against the figure of ₹20,000 crore projected by FIEO in the press reports,” it said. Accordingly, the second special drive has been organised which will facilitate all types of refund claims in which Customs, Central and State GST officers will try to clear all GST refund applications received on or before April 30. This will include refunds of IGST paid on exports, refunds of unutilised ITC and all other GST refunds submitted in prescribed form (FORM GST RFD-01A).

The Central Board of Indirect Taxes and Customs (CBIC) is implementing a solution whereby the refunds held in GSTN, in cases where the exporters have mistakenly declared their export supplies as domestic supplies, would now be transmitted to Customs EDI System. A circular dated May 29 has been issued to set in a procedure to resolve problems. “On receipt of the records from GSTN, the Customs’ system would automatically process the refunds for sanction, if no other errors are committed by exporters,” the statement said.

The Ministry has appealed to all GST refund claimants to approach their jurisdictional tax authority for disposal of any of their refund claims submitted on or before April 30., which are still pending.

The Federation of Indian Export Organisations (FIEO) has welcomed the move. It’s Director-General Ajay Sahay said the decision to introduce the clearance drive is the most welcome move as it will accelerate the process of refund. “Exporters should come forward to take maximum advantage of it. Software, technical and procedural constraints should be addressed to make it successful so that we start on a clean slate with zero carry forward balance,” he said.

Clarity on refunds

Commenting on the development, Pratik Jain, Partner & Leader, Indirect Tax, at PwC, said the circular for refund of IGST paid on exports allows refund even in case of mismatch of tax liability on exports of goods disclosed in GSTR 3B and GSTR 1. Another circular on refunds issued under the CGST Act clarifies that refund of accumulated credit of GST compensation cess will also be granted to exporters along with the refund of accumulated credit of CGST, SGST and IGST even if the end product does not attract compensation cess.

“This will help a number of exporters where some of the inputs attract compensation cess but there is no output cess liability. Another welcome clarification is that the exporters of exempted or non-GST goods do not need to submit LUT or bond for exports (though they may need to comply with similar requirements under excise or customs Act) and such exporters will also be eligible to claim refund of unutilised GST credit. This should help in reducing the documentation requirements for such exporters and clearly allows for refund of ITC,” Jain said.