The Central Board of Indirect Taxes and Customs (CBIC) has sanctioned Rs 12,639 crore of refunds to exporters, almost all of the pending amount of Rs 13,000 crore estimated by the government at the start of this month. Out of the total Rs 12,639 crore sanctioned to exporters, Rs 7,632 crore is on account of payment of Integrated GST (IGST) on exports under the goods and services tax (GST) regime, while the rest of the amount of Rs 5,007 crore has been cleared as refunds for input tax credit (ITC), CBIC chairman Vanaja N Sarna said in a letter to CBIC officials.
Sarna said that Rs 2,293 crore was sanctioned as IGST refunds as part of the Board’s special drive which began March 15, while Rs 633 crore was sanctioned as ITC refund during the drive.
Prior to the start of the drive on March 15, IGST refunds worth Rs 5,339 crore had been sanctioned and ITC refunds amounting to Rs 4,374 crore had been approved by the Board. “I am informed that officers’ intervention has ensured sanction of refunds to exporters in many cases,” Sarna is quoted as saying in the letter.
Last month, Sarna had said that incomplete details in refund claims and mismatch errors by exporters were creating a hurdle in processing the remaining refund amount.
Earlier this month, the Prime Minister’s Office had called a meeting of officials of commerce and finance ministries to discuss the issue of GST refunds as exporters had claimed that 70 per cent of their refunds were still stuck even after eight months of roll out of the new indirect tax regime. Subsequently, the CBIC had launched a nationwide Refund Sanction Fortnight from March 15-29 (later extended till March 31) to ensure settlement of the maximum number of pending refund claims.
Under GST, exporters are required to pay IGST on exports and then claim refunds. The second type of refunds to exporters under GST involve refund of GST paid on purchase of inputs.
As per a CBEC release dated November 29, the quantum of IGST refund claims as filed through shipping bills during July to October 2017, was approximately Rs 6,500 crore and the quantum of refund of unutilised credit on inputs or input services filed on GSTN portal, was about Rs 30 crore. The refund claims were subsequently revised upwards to around Rs 13,000 crore.
A study as part of RBI’s Mint Street Memos series last month had stated that the implementation and refund delays under the new indirect tax regime of GST seem to have led to working capital constraints for firms, which in turn might have hurt their exports in October 2017. The study had indicated that a short-term liquidity shock impacted firms in the export sector, with the firms with high working capital/sales ratio such as such as, petroleum and gems and jewellery sectors hit the most due to the liquidity constraints.
However, the subsequent initiatives taken by the government since then appear to have significantly alleviated exporters’ concerns which got reflected in the exports growth pick up in November and December 2017, it had said.
Rs 7,632 crore cleared for IGST
* Out of the total Rs 12,639 crore sanctioned to exporters, Rs 7,632 crore is on account of payment of IGST on exports under the GST regime, while the rest of the amount of Rs 5,007 crore has been cleared as refunds for input tax credit (ITC), CBIC chairman Vanaja N Sarna said
* Rs 2,293 cr was sanctioned as IGST refunds as part of the Board’s special drive which began March 15, while Rs 633 cr was sanctioned as ITC refund. Prior to March 15, IGST refunds worth Rs 5,339 cr had been sanctioned and ITC refunds worth Rs 4,374 cr had been approved