As much as Rs 20,000 crore is pending with the government on account of GST refund, creating liquidity crisis for exporters, FIEO today said.
Federation of Indian Export Organisations President Ganesh Gupta said the delay in refund is mainly impacting small exporters who provide jobs in labour intensive sectors.
“Liquidity is a major area of concern particularly for MSME exporters who constitute the bulk of exports in high employment intensive sectors. The challenges on GST front are continuing though the fortnight clearance drive, which was highly successful, gave us the hope that refund will be provided on real time basis,” he told reporters in New Delhi.
While claims of over Rs 7,000 crore were cleared in March, the amount in April is little over Rs 1,000 crore, he said.
As per our estimate, refund of over Rs 20,000 crore are pending on account of IGST (integrated GST) and ITC (input tax credit) and many exporters have not been able to file the refund of ITC due to technical glitches as input tax credit and exports happened in different months.Ganesh Gupta, President, FIEO
Gupta said that the GST refund process has considerably “slowed down” and the federation has urged the finance minister to look into the refund problem and organise a clearance drive to liquidate the pendency and bring the refund process on track.
Majority of the problems, he said relate to input tax credit refund which have to be done by the states as well. The manual intervention in the refund process has added to the transaction time and cost of exporters, he added.
“The provision that 90 percent of ITC refund will be issued within seven days is not being implemented by tax authorities. Some of the states say that they do not have funds to clear the refund,” Gupta said.
Further, he said after the incidents of bank frauds, banks have become extra cautious while providing credit to exporters.
Withdrawal of letter of offer and letter of comfort after the Nirav Modi fraud, has added to the cost of funds for exporters by 1-3 percent, he said adding that while banks should adhere to the procedure, they have to be proactive to the needs of the sector.