September 23, 2017

The finance ministry on Friday said the government was devising a method to ensure that exporters receive refunds only after filing GSTR-1.

However, it also added that the problem of blockage of working capital for exporters isn’t as ‘grievous’ as reported as exporters dealing in two-thirds of the exports had chosen the ‘duty drawback’ scheme, which doesn’t depend on refunds from the Centre. Under GST, exports aren’t taxed but instead of exempting exporters from paying GST, they are provided with refunds of the taxes already paid.  However, these refunds were available only after filing GSTR-3 forms but the GST Council postponed the filing of detailed returns after taxpayers faced technical glitches on GST Network.

“A lot of people are speculating that the refund for inputs in case of exports under GST will be available only when regular form GSTR 3 is filed for every month. This is not the case.  We are trying to find a way of giving refund by linking form GSTR 1 with form GSTR 3B  and, therefore, for the month of July, where form GSTR 1 is already filed, the authorities would be in a position to process the refund applications,” the finance ministry said. Moreover, the ministry said the duty drawback scheme was actually extended in the GST regime for a period of 3 months, i.e. up to September 30, 2017, subject to that exporter not taking input tax credit under GST.

This means that as of now, for 66% of the value of exports, there is no blockage of funds,” the finance ministry said. The ministry further said that the remaining exporters got refund only after 5-6 month of actual exports even in pre-GST regime. Separately, the government also extended the last date for filing TRAN-1 forms, used for claiming credit on the pre-GST stock held with assessees. “The earlier notification only extended the TRAN 1 revision date to October 31 whereas the original TRAN 1 had to be filed by Sept 28. Vide the new notification now the tax payers can file the original TRAN 1 also by October 31 which would be a big relief to the tax payers, Abhishek Jain, tax partner, EY India, said.

[The Financial Express]