Rules on IGST refund ambiguous, say Tirupur’s exporters

LN Revathy Coimbatore | Updated on February 18, 2018

To approach GST Council, seek correction on anomalies in system

Even as the Centre evinced its readiness to give IGST tax refund, a good number of exporters in Tirupur have not made an earnest attempt to file their returns, citing ambiguity in making the refund claim, industry insiders say.

“Our understanding of the GST notifications on IGST refund has led us to believe that it would be cleared automatically through the refund mechanism. But there is an anomaly in this. We have decided to approach the GST Council to request a correction,” said Raja M Shanmugham, President of Tirupur Exporters’ Association, referring to the import of capital goods, wherein the tax claim is not allowed by way of refund.

“We learn that this cannot be set off against inputs, including raw material purchase. The IGST incidence is quite high in import of capital goods,” he added

Exporters have also expressed anxiety over not being able to make the IGST refund claim using the carry-forward mechanism route.

Small exporters, who bank on auditors for help, point fingers at these professionals, stating that “they ask too many questions”.

Meanwhile, the Tirupur Exporters’ Association (TEA) has offered to help exporters who are in a fix over filing refund applications.

S Dhananjayan, a senior auditor, told BusinessLine that exporters could either submit a letter of undertaking, or a bond, or choose the IGST route to claim the tax refund.

A handful of exporters who chose the IGST route are understood to have received some refund after adjusting for tax.

Yet another route is to get the Input Tax Credit (ITC) and make a matching claim. Originally, the units had to file three returns every month, but this has been suspended till March 2018.

This has resulted in exporters being unable to make a claim on the online platform. They can however opt for manual processing, and this involves furnishing of each and every transaction detail, Dhananjayan explained.

He conceded that the exporters were under immense pressure due to the delay in getting tax refunds after the GST regime was rolled out.

Interactive session

To address their grievance, the exporters’ body had invited M Periasamy, Joint Commissioner of GST and Central Excise, for an interaction. He had urged the participants to shed their inhibitions on GST for achieving compliance and getting refund of ITC at the earliest.

But exporters, particularly the smaller players say that the resultant impact of GST roll out has put them in their “lowest ebb”.

The change, it appears, has not been easy, with the industry blaming the government for thrusting it on them without taking the micro-economic issues into consideration.

Published on February 18, 2018

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