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Finance ministry steps up efforts to expedite GST refund process of exporters

Arun Sreenivasan, New Delhi
Wednesday, June 13, 2018, 08:00 Hrs  [IST]

Pharmaceutical companies struggling to receive their refunds for Goods and Services Tax (GST) paid on exports over technical glitch or error in documentation can expect some relief in the coming days as the Union Finance Ministry is stepping up efforts to expedite the process. Since a majority of refund claims are held up either due to insufficient data or lack of due diligence on the part of exporter while filing GST returns, the Board of Excise and Customs (CBEC), at a high-level meeting convened recently, has decided to follow up exporters’ problems individually and asked them to submit data pertaining to non-receipt of refund along with the contact number of a company official well-versed in the subject by June 14.

The meeting, attended by Pharmaceuticals Export Promotion Council of India (Pharmexil), was chaired by Member Customs. Top officials from Directorate General of Foreign Trade, Directorate General of Export Promotion and various other departments were also present at the meeting. The council has already asked its members to submit relevant details to enable it to take up the matter with the CBEC.
At the meeting, Member Customs apprised the participants about the pending GST refunds and the reasons for the delay which varied from errors creeping in due to wrong entries in refund filing to some technical issues.

The GST, which was implemented in July last year, subsumes all the indirect taxes that businesses used to pay the central authorities and state authorities separately. Under this scheme, companies could claim refunds for the taxes they had paid while buying raw materials for their businesses. However numerous technical glitches made it difficult for authorities to reimburse the input tax credit refund on time causing capital deficit or liquidity problems to exporters.

The latest move by the government to approach the issue on an individual basis is good news for scores of small and medium drug exporters who have been grappling with multiple challenges of return filing mandate under the new GST law for the last 9 months. But an effective solution is possible only if a functional and easy-to-operate return filing mechanism is in place, they say.

“Timely refund against the exports made by the pharmaceutical companies is crucial to avoid cash flow pressure. But many issues are yet to be resolved,” Bihar Drugs and Pharmaceutical Manufacturers Association President Sanjiv Rai told Pharmabiz. According to industry estimates, more than Rs.1,000 core is stuck with the government because of the present system under which exporters pay duties first and then get refunds.

According to data released by the CBEC, the refund claimed by an exporter is higher than the GST paid by him in many cases. As a result, the information filed by exporters is not forwarded to Customs by the GST Network. Other major errors committed by exporters in claiming refunds include mismatch of invoice number, taxable value and IGST paid in the shipping bill against the details mentioned in GSTR 1 or Table 6A and incorrect shipping bill numbers in GSTR-1.


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