Exporters face working capital crunch post-GST 

A feature that enables exporters to claim tax returns they had already paid for through raw materials is not active in the GST-N software.

Published: 29th September 2017 03:00 AM  |   Last Updated: 29th September 2017 08:59 AM   |  A+A-

Express News Service

HYDERABAD: Those in the export business in Telangana are facing credit crunch for working capital for day-to-day operations, post the introduction of Goods and Service Tax (GST). 
The feature that enables the exporters to claim tax returns they had already paid for through raw materials is not active in the GST-N (network) software. Thus, exporters are unable to claim input tax credit. They expect the problem to persist till December this year and apprehend a fall in exports from the state in the coming months. 

Amit bandre

Exports from India are tax-free but exporters pay their share of tax while buying products or raw materials needed for export. Under GST, all taxes have been subsumed into the raw materials and taxes are paid by everyone in the product chain. But, the input tax can be claimed only through the GST-N (Network) software. However, due to “technical reasons”, the feature has been disabled, for now. The Central government has so far collected `95,000 crore in taxes from all states since tax collection began in August and owes taxpayers`65,000 crore as input tax refundss. The Telangana government had collected `Rs 3,200 crore by August and taxpayers in the state are entitled to approximately over ` 2,100 crore as tax refunds. But, with a glitchy software, the reimbursement of the tax is now tied to the streamlining of the software.

“The GSTN software is not ready, the refund feature is not ready and we have understood that before December wet may not be able to claim returns,” said K Unnikrishnan, joint director-general, Federation of Indian Export Organisation (FIEO), Southern Region. “We are in talks with the department of revenue and Central Board of Excise and Customs (CBEC) and we are asking them to ensure that as soon as we file GSTN1 or GSTN3b, exporters should be given outright refund of taxes. If you delay for two or three months, it adds to our costs and we are losing our competitiveness domestically and abroad,” he added. 

Take for instance, the 3,000-unit-strong granite sector in Telangana. The sector has been taxed at 28 per cent GST but the profit margins are just 5 to 10 per cent. Unnikrishnan points out that if a certain per cent of that profit margin is tied up with the Centre for six months, there will be a negative impact on the sector.
“GSTN is not supporting the documentation and other things, we are in talks with the Regional Advisory Committee (RAC) in the state. There are a few things that are not ready , we are making a list of the problems businesses are facing,” said Srinivas Gowra, president Federation of Telangana and Andhra Pradesh Chambers of Commerce and Industry (FTAPCCI). 

Capital crunch impact on business
Talking about the impact on businesses in the state due to reduced capital, a businessman says the impact would be tough for now but disastrous in six months time if the problems are not fixed.  
Hyderabad’s export base lies in automobiles and auto component industry. The state is also a major exporter of spices, minerals, and textiles. Pharmaceutical and IT  form the largest chunk of  state’s exports.

Refund process time
GST for exporters, 90 per cent of the refund amount should be processed within a week of acknowledgment of the receipt. The remaining 10 per cent is to be paid within 60 days. Exporters are entitled to a 6 per cent interest rate payable if the full refund is not granted within 60 days.


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