CHENNAI: Indian exporters have not had a good time of things over the last few quarters. But despite global headwinds and a strong rupee depressing export growth, GST-driven woes have taken the centre stage. Exporters, especially small ones, have been struck by increasing cost of working capital caused primarily due to the change in tax systems and concession channels. Refunds cannot even be claimed by exporters currently since the provisions have not been made operational on the GSTN portal.
For example, the Engineering Exports Promotion Council (EEPC) pointed out earlier that the issue of bottlenecks in working capital have to be immediately addressed if exporters are to gain some relief. Ironically, the deadline extensions for filing GST returns are set to make matters worse for exporters. “... it would mean blocking of GST refunds for exporters, who are in any case hard pressed for cash and have been significantly disadvantaged by the continuous rise in the value of rupee against the US dollar,” the EEPC pointed out.
The main issue is the change in the way tax breaks are being channelled to beneficiaries. Under GST, the tax has to be paid on purchases of input goods and services and this credit, available with exporters, is supposed to be claimed as refund.“According to the ‘back of envelope’ calculations, GST refunds of at least Rs 1,520 crore would be held up until the end of October for July. If the IGST, paid by exporters, is added, dues to the exporting community would be in excess of Rs 1,700 crore for July alone. Such a dispensation would certainly add to our costs and make our exports that much uncompetitive,” said EEPC chairman T S Bhasin.
A small-scale textile exporter in Tirupur pointed out that they are mulling reducing, or even holding back exports until the export exemptions stuck with the government find their way back. “The cost of working capital is shooting up because of delayed refunds.” The situation has led exporters to demand that the government begin refunds based on shipping bills, with verification done later based on the filed GST returns.
The GST Council has finally begun to speed up the resolution process, forming a committee of officers, headed by revenue secretary Hasmukh Adhia, to identify embedded taxes in exports and look at ways to exclude or refund them after repeated concerns raised by the Commerce and Industries Ministry.