In the meeting held earlier this month, the GST Council has decided that it will implement e-wallet system to ensure timely refunds to exporters. In support to the Council’s decision, Commerce and Industry Minister Suresh Prabhu, on Sunday, said that the e-wallet mechanism will address and resolve the issues of exporters who have not been getting a timely refund of GST taxes.
Once the e-wallet system is implemented, exporters will be given a notional credit based on their tax record which they can use to pay taxes on inputs. Prabhu also confirmed that the commerce and finance ministries are already working on resolving the issue. “The only way it can be addressed properly is through e-wallet (mechanism). Finance ministry has to take a call on this. E-wallet will actually address the issue because then you (exporters) do not have to pay and seek refunds,” said Prabhu in his statement.
Read Also: What is GST Refund Fortnight Scheme and How it Works for Exporters?
The release of refunds to exporters is being continuously delayed for over eight months now. The delay in refund of taxes has been causing a serious cash flow issue for exporters, which in turn, is affecting shipments.
The revenue department insists that there are discrepancies in the details provided by exporters to the customs departments and those filed with the GSTN. This is forcing them to hold the release of refunds until the discrepancies are resolved.
As per reports, over Rs. 20,000 crores of refunds are to be paid by the revenue department on account of duty claims to exporters. Before GST, exporters didn’t have to pay any duties to begin with, however, the new tax regime has the provision to pay taxes on imports which can be recovered back on exports.
Seeing the rising complexity of the GST refund issue, the Prime Minister’s Office had recently conducted a meeting of top finance and commerce ministry officials to discuss and resolve the matter.
The CBEC, on the other hand, has launched GST refund fortnight scheme under which pending refunds will be quickly sanctioned to eligible exporters.
The launch of the e-wallet is the next step in that direction. Federation of Indian Export Organisations (FIEO) has also confirmed that e-wallet has the potential to resolve the liquidity problem. It will work as a current/running account for exporters from where imports duty will be automatically debited and the refund will be credit back for the eligible exports.
