The drawback of the input duty refund under the duty drawback scheme is that it is lower as compared to last year’s IGST refund as claimed by the exporters which further noted by the Commerce Ministry.
According to a government official, “exporters have said that they are willing to pay back the drawback with interest and they should be instead given IGST refund which is a much higher amount. The DGFT is likely to take up the matter with the Customs Department.”
When GST came into existence last year, for three months, the exporters were given the option of resuming with the famous duty drawback scheme (at a higher rate for some items) if they admit to letting go the refund of IGST paid by them.
The duty drawback option was selected by many exporters and after that, they realised that selecting refunds under IGST would have been a better deal as the IGST paid by them on inputs was higher.
“In the initial period, everyone was confused about GST impact. A number of exporters were not aware of the implications and chose to be compensated for input taxes under the duty drawback scheme. Now when they understand that GST refund would give them a much higher amount for many items, the government should oblige,” said Ajay Sahai from the Federation of Indian Export Organisations (FIEO).
The Financial Minister once declined to permit exporters to change their decisions while the Commerce Ministry said that the issue will be taken again. Exporters need to be compensated fully for the input taxes paid as it is vital to help them stay competitive in the global market,” they said.
