New Delhi, April 27, 2018: Commerce Minister Suresh Prabhu last week promised to address the problem of delayed refunds faced by exporters under the Goods and Services Tax (GST) regime and take up the issue with the Finance Ministry. In a meeting with industry representatives, the minister admitted that GST refund is a major issue for the sector and stressed on the need of a concrete plan to address the challenge. The assurance came in the background of claims by exporters that over 60 percent of their refunds are still stuck with the government.
A recent study report by the RBI, ‘Working Capital Constraints and Exports: Evidence from the GST Roll-out’ shows how a short term liquidity shock could impact firms in the export sector, which are generally believed to be financially sound. This is reflected in the exports growth number in October 2017, which declined to -1.2% (year-on-year), the report mentions. However, according to government claim, corrective measures taken in October have alleviated the distress, but exporters view that little has changed on the ground level according to smetimes.in.
Official data shows that the Centre has sanctioned GST refunds worth about Rs 12,700 crore. This amounts to 80 percent of the eligible claims of exporters, but these figures hardly reflect the graveness of the problem as they do not take into account the claims where returns have been filed wrongly. According to exporters, the real percentage is much lower as many exporters have filed GSTR 3 erroneously. Additionally, the GST authority collects data from the Customs department and sorts it out manually and this tedious process further delays the refunds.
According to reports are published in smetimes.in over the last few months, exporters have raised the concern over GST refund delays time and again. Several industry bodies have requested the government to come out with a solution. But the Government’s response has remained tame and the problem has refused to go away. This situation needs to be reversed. Our exports growth in 2017-18 is not that encouraging, particularly in the light of revival of global demand. Additionally, the trade war between the US and China may further impact us. So, time is now to take care of the sector.
