GST Council set to ease refund procedures for exporters in Jan meet

While 2017 was a year of transition for businesses as India switched to a new indirect tax regime, 2018 may alleviate the struggles of exporters grappling with liquidity crunch, as the government plans ease the refund-claiming process.

In its next meeting, GST Council—the apex decision making body of the new indirect tax system—may relax rules to claim Goods and Services Tax (GST) refunds from the Centre and states, a senior government official told Moneycontrol.

“Exporters are facing challenges claiming IGST (integrated GST) and input tax credit refunds, as the process is cumbersome. We are looking at easing these rules,” the official said.

The Council will meet on January 18 in New Delhi.


Exporters complain that procedural hurdles, coupled with new rules and regulations have made claiming export refunds difficult. The relaxation in norms should bring cheer for exporters who have been complaining about technical issues, locked up tax refunds affecting working capital availability and hurting operations.

The Council, headed by Finance Minister Arun Jaitley will also look at the provisions and specific rules pertaining to the e-wallet facility to facilitate speedy refund.

In October, the Council had approved a plan to operationalise up an e-wallet from April 1, 2018 that could be used by each exporter. A notional amount will be given as an advance amount in this wallet, which will enable GST credit against which the exporters’ refund will be offset.

Apart from easing rules related to refunds, the apex body is unlikely to continue with further rationalisation of GST rates.

“Considering the decline in monthly revenue collection from GST, there may not be further rate cuts announcements next month,” the official said.

Revenue collection from GST for the month of November slipped further to Rs 80,808 crore, lowest since the implementation of the indirect tax system from July 1.

The dip in revenue collection was mainly due to a decline in overall incidence of taxes on most commodities, especially after the apex decision making body of the new tax system–GST Council–cut rates of more than 200 items in its 23rd meeting in Guwahati. According to estimates, the government will face revenue loss of Rs 20,000 cr annually owing to the rate cut.

While only 50 items remain in the 28 percent tax slab, the industry, has been pushing for bringing down rates for some more items such as cement, paints, and white goods.

Sources said that rate cut at this juncture is unlikely as items such as cement constitute a major chunk of revenue.

According to experts, revenue may fall down further in the next two-three months as the government has to look at other aspects such as refund, and utilisation of credit.

The GST Council’s 25th meeting will be crucial as the government may propose significant changes in the laws and rules, to simplify procedures and ease rules for the business.

The changes may include simplifying the tax return filing process and the composition scheme, apart from the decision on whether to continue with reverse charge mechanism (RCM), tax deducted at source (TDS) and tax collected at source (TCS).

The Council will deliberate on the recommendations of the law advisory group that will finalise its report on January 5. The committee will propose key recommendations pertaining to amendments in laws and rules to make the new tax system simple.



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