In the meeting held earlier this month, the GST Council has decided that it will implement e-wallet mechanism to GST refund issue to exporters who have been complaining of delays in the refund of taxes under the GST regime, Commerce and Industry Minister Suresh Prabhu said on Sunday.
After the e-wallet system is implemented, exporters will be given an estimated credit based on their tax records, which they can use to pay taxes on input. Prabhu has also confirmed that the Ministry of Commerce and Finance is already working on resolving this issue. “It can be addressed properly through e-wallet. The finance ministry will have to make a call on it.” E-wallet will actually address this issue because you (exporters) have to pay and refund do not have to pay and seek refunds,” said Prabhu in his statement.
The release of refunds to exporters has been delayed for over eight months now. The delay in refund of taxes is blocking their working capital and impacting shipments.
The revenue department insists that there are discrepancies in the details submitted by exporters with the customs department and those with the GST Network (GSTN). This is forcing them to hold the release of refunds until the discrepancies are resolved.
As per exporters, about Rs. 20,000 crore of GST refunds to be paid by the revenue department on account of duty claims to exporters. Before GST, exporters didn’t have to pay any duties, to begin with, however, the new tax regime has the provision to pay taxes on imports which can be recovered back on exports.
Due to the claims of duty, the revenue department did not have to pay any duties to start with the exporters before the GST, however, there is a provision to pay taxes on imports in the new tax regime which recover recovered on exports can be done.
The Prime Minister’s Office had earlier called a meeting of top officials of commerce and finance ministries and commerce ministry officials to discuss and resolve the matter.
The CBEC, on the other hand, has launched GST refund fortnight beginning yesterday to quickly sanction pending refunds to exporters.
Federation of Indian Export Organisations (FIEO) had stated that e-wallet could help resolve the liquidity problem. Exporters may use it like a running account where imports duty will be automatically debited and the refund will be credit back for the eligible exports.