The government is considering measures to help exporters whose working capital has been blocked due to delayed refunds after the Goods and Services Tax rollout.
“We are looking at the possibility of depending purely on GSTR-3B (form), maybe with some additional information,” Vanaja Sarna, chairman of the Central Board of Excise and Customs, told BloombergQuint in an interview. “The committee (to review exporters problems) is looking at it and all these problems of exporters will be addressed.”
GSTR-3B are summarised returns of purchase and sale of goods and services that taxpayers are required to file until December. Refunds can be claimed through GSTR-2 and have to be filed by October 31 for the month of July.
“This (refunds) module is not yet ready, and that is where the problem happened, and people feared the slowness, that if it is not ready, how do we seek refunds?” she said.
Under GST, exporters are required to pay Integrated GST on exports and then claim refunds. They face working capital crunch as the government is yet to process refunds. Earlier, no duty was paid at the time of exports.
On whether the Ministry of Commerce has recommended creating a dedicated fund to process quick refunds, Sarna said it is one of the alternatives being considered by the Committee of Exports, headed by Revenue Secretary Hasmukh Adhia. BloombergQuint had reported on September 22 that government is considering a fund with a corpus of around Rs 20,000 crore to expedite refunds.
Sarna said that it will take around three to four months for GST tax collections to stabilise as a number of new taxpayers are still being added, and the government is yet to process refunds of exporters.
“There are 24 lakh more people who have joined the fray. So, they will start filing returns, they will start paying taxes, and I think in the first few months, it's a bit difficult to gauge, we need to let it settle for 3-4 months to be able to stabilise the figure and share it,” she said.
Read the entire transcript of the interview below...
Exporters are facing problems due to delayed IGST refunds. What steps the government will take to provide them relief?
We understand there is an issue of blocked capital for exporters. The cycle they had earlier is pinching them slightly because in the pre-GST regime, people exported without paying of any duty. Today, they have to pay IGST and seek refund. This was the standardisation that was brought out with GST. You pay and then you seek refund.
As per the law, the requirement that you are supposed to seek your refund through an IT enabled module. This module is not yet ready, and that is where the problem happened, and people feared that if it is not ready, how do we seek refunds? There is a Committee on Exports that has been set up and it’s looking into the issues on both IGST you are paying and the refund thereafter, and the accumulated input tax credit which you are seeking as refund. All of this is being examined, and the committee will be coming up with its recommendations shortly. Hopefully, the recommendations will go before the GST Council which will meet on October 6.
The commerce ministry had recommended setting up a dedicated fund to process quick refunds of exporters. Will this fund be set up soon?
We need to see which is the best alternative. This is one, but there are many. The question is that you plan to give your refunds through a manual way. Is that the faster way? The other is can you manage to give refunds without waiting for the GSTR-1. For the month of July, there is no issue as most taxpayers have filed GSTR-1. But if you haven’t filed GSTR-2 and GSTR-3, you can’t file GSTR-1 for the month of August. That’s the stumbling blocks. And, if you don’t file GSTR-1, then it can’t be matched with GSTR-3B, but those are all getting ironed out. We are looking at solutions, at the possibility of depending purely on GSTR-3B, maybe with some additional information. The committee is looking at it and all these problems of exporters will be addressed and a solution will be found.
The number of taxpayers who filed returns for August has reduced by a lakh as compared to July? Although, tax was collected in July for 29 days compared to 25 in August. What’s your take on this?
In July, when we gave the figures, we indicated that 38.38 lakh assessees had filed theirs returns—this was on August 29. When we gave the figures for the next month, we indicated that up to September 25, around 37 lakh assessees had filed their returns. Within two or three days after that, it went up to 40 lakh. So, it’s a question of slowly adding on, and this is going to be a cycle that we will be facing for sometime. People who would have registered and filed their returns in July. The tax base was around 59 lakh that month and it increased to about 67 lakh. So, in October, people will file their returns for the month of September, but there will be a trickle effect of August. There will still be people who did not file their returns for August, and also July. So, this is the continuous way the business will happen till the time GST settles down and people start filing in a more regular way.
At the same time, we gave figures for July and then we gave the figures for August without specifying because there could be an overlap. These will be coming majorly from the previous month, but a trickle from the month before and the month before that. So, when you go on to December, you will get collection not only from the month of November, but will see collections still tricking in from September or October. People may not mind paying interest, they may have faced some difficulty, it may have been an incomplete form.
There is still no clarity about tax collections under GST due to refunds claimed by exporters and input credit claimed by taxpayers. Could you give some clarity on that?
Right now, we can only give the tax collected in the first two months as we are yet to give refunds, and there are still new assessees. There are 24 lakh more people who have joined the fray. So, they will start filing returns, they will start paying taxes, and I think in the first few months, it’s a bit difficult to gauge. We need to let it settle for 3-4 months for the figure to stabilise and share it.
What are the steps the government is taking to reduce burden on small taxpayers? Will the government increase the threshold under the Composition Scheme to Rs 1 crore?
The small and medium sector is facing difficulties. Whatever recommendations have come will go to the law committee (of GST). You need to have both centre and states on board. Taking all that into account, it would definitely be taken up.