Exporters, especially the micro, small and medium players, have been the worst hit after the Goods and Services Tax (GST) regime was rolled out last year, due to blocked refunds of the Integrated GST (IGST) and the input tax credit (ITC). However, things seem to be finally improving, thanks to two recent clearance drives by the government.

However, software glitches are still slowing things down, especially for ITC refunds, exporters say. Filing errors and entry mismatches in GST returns and refund claims is also a problem.

During the second refund drive, which took place between May 31 and June 16, the Central Board of Indirect Taxes and Customs (CBIC) claimed to have refunded ₹6,087 crore.

A total of 1.68 lakh shipping bills were processed during the period, and IGST refund claims of about 9,293 exporters were sanctioned, including those of about 3,500 whose dues had been held up, the CBIC said.

The total GST refund disposed till June 16 stands at ₹41,548 crore, it added.

Ganesh Kumar Gupta, President of the Federation of Indian Export Organisations, said the special efforts by the Centre and the States to release the refunds had helped ease the liquidity constraints of exporters.

The CBIC’s assurance that the momentum gained during this fortnight would carry on has also pleased exporters. Gupta said it was heartening that the tax authorities would continue to be in disposal mode even after the drive period.

ITC refunds: a pain point

The Fieo chief, however, pointed out that sticking points remained in the area of claims for ITC refunds. In a statement, Gupta urged that the software for such refunds be modified immediately so that those exporters who have filed ITC claims in months different from when they exported, could file their applications. Such exporters have been awaiting their claims for the last 11 months.

Gupta also suggested that the government move to a wholly online system for ITC refunds, on the lines of the IGST, to reduce transaction time and costs.

Procedural hitches

The differences in the amounts entered in the IGST returns filed by exporters and the refunds claimed have also resulted in the blocking of refunds. Exporters say the discrepancies crept in as they were not very sure about the refund process in the initial period when returns were filed and the new rules were being getting notified continuously.

According to the CBIC, efforts are being made to resolve those issues that are still pending, but exporters need to ensure that the correct procedure of filing returns, giving accurate information in shipping bills and submitting the RFD01A application forms to the jurisdictional formations are followed for quick disbursal of their refund claims.

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