As per an official, Sooner there will be a single authority for sanctioning and processing of the GST refunds. The Finance Minister has looked into the matter and is thinking to revamp the GST refund process.
Currently, the process has a twin refund sanctioning authority of the central and state tax officers. But with the proposed new structure which is likely to implement by August this year, we will witness the availability of a single authority instead of two.
According to the system being currently practised by the Revenue Department, the taxpayer is eligible to receive the full rebate from his jurisdictional officer once the claim is sanctioned. Otherwise, the centre and state will divide the amount to be paid to each other.
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In the existing system, if the taxpayer applies for refund claim from the jurisdictional tax authority, he will get 50 per cent of the claims from the central tax officer. While the remaining portion of the claim will be granted by the state tax officers post examination.
In case if a taxpayer asks for the state tax officers for GST rebate, he will follow the similar system. However, the process will take a long time to clear the claimed refund which will lead to a liquidity crunch for exporters- an issue which suggests a single authority mechanism for the GST refunds.
Under this ‘single authority mechanism’ if a taxpayer files for a refund claim with a tax officer, whether Centre or state, the only officer will scrutinize, asses and clear the full tax refund (including Central GST and State GST portion) and will end up the difficulties taxpayers face while claiming for GST refunds. And the two tax authorities will adjust and settle the funds for refund claim through internal account adjustments.
The two authorities are currently performing the same mechanism for the refund claim which consequently develops unnecessary complexities and inconvenience for the taxpayers.
It has also been noticed that even after the payment for a refund made by the concerned jurisdictional tax officer. Several times the fellow tax authority delays the GST refund.
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The GST council divides GST taxpayers as per the formula which explained the control over 90 per cent of the assesses with annual turnover under INR 1.5 crore will be managed by the state tax officials while the remaining 10 per cent are administered and controlled by the central tax officers.
While the assesses who have an annual turnover above INR 1.5 crore are administered and controlled by the centre and states in 50:50 ratio. AMRG & Associates Partner Rajat Mohan on the coming change said, “A single window tax refund in a federal, democratic economy would be a massive jump in ease of doing business.
However, the inter-government tax adjustments are suggested to make on a month-on-month basis in order to end up the suspect of any temporary revenue deficit to a respective government.
