With a broader view of providing a major relief to exporters, the Centre will now pay the Input Tax Credit refunds of state taxes, thereby minimizing transaction time and costs, and manual interface in claim processing.
As per reports of various industries across the nation, there is a big difference in the amount claimed, State Goods and Services Tax (SGST) sanction amount received from Central Tax authority and the amount actually disbursed.
According to the 2019-20 budget “The central government has been authorized to pay the amount of refund towards state taxes to the taxpayers”. Currently, the taxpayers file refund claims with the central tax officer, who clears half the claims, and the rest are cleared by the state tax authorities, but this process leads to higher time taken in claim processing and refund sanctioning.
Exporters have always been complaining that the ITC refund is partly electronic and partly manual. In practice, the exporter files refund application at the portal, takes a printout along with acknowledgement and carries it to GST authorities in hard copy along with necessary documents, but this too differs from authorities to authorities. The physical interface adds to the transaction extra time and cost.
“The states and Centre did their own respective approval of ITC refund but now only one will approve both. This is a relief for exporters as it would reduce transaction time and costs,” said Ajay Sahai, director general at Federation of Indian Export Organizations.
The relaxation arrives as exporters grapple with tight credit norms amidst the slowing global trade growth. Total disbursement of export credit was ₹ 7.38 lakh crore in December 18, a decline of 20% just within a year.
Share of PSU banks in total disbursement of export credit declined from 65% in Financial Year 2016 to 45% in Financial Year 2018.
Exporters have informed that the number of refund applications filed on the GST portal are higher than those received in the state tax offices.
As per this decision the centre to give the refund for both the CGST and SGST shall ease the issues being faced now-a-days specially by the exporters and eliminate the delay in getting the entire cash post the sanction of refunds. It definitely will bring a relief to a number of exporters across the nation.