NEW DELHI: The Government is mulling a dedicated fund to expedite timely refund of taxes paid on input for export, to address liquidity woes of exporters under the new goods and services tax (GST) regime.
A corpus of Rs 20,000-30,000 crore is under consideration, to narrow the input tax credit cycle and facilitate their working capital requirements.
“It is in the initial stage of discussion that a designated fund be set up to help exporters with liquidity, as outbound shipments are already under stress,” said a Government official.
He added the matter was discussed last week in the Hasmukh Adhia-led committee, set up to address exporter concerns under GST. If approved by the panel, the proposal would go to the GST Council. Finance Minister Arun Jaitley will take a meeting of the Council next week through video conferencing.
Mr. Ajay Sahai, Director-General of the Federation of Indian Export Organisations, said such a fund would address the problem of 90 per cent of exporters. “We have, in fact, recommended an electronic wallet facility for refund purposes. But, that might take time, as GST Network (the new levy’s information technology backbone) is already under stress,” he said.
The extension of return filing deadline has added to the anxiety of exporters, as they fear working capital might get stuck for a longer while. A dedicated fund could help in this.
Another solution being considered is completely exempting imported inputs that do not face basic Customs duty from Integrated GST (IGST). Exporters have to pay IGST on import of goods and then claim refunds based on their scrips under the new tax system.
A decision is likely soon, with worry of a slowing economy and job creation. Growth in gross domestic product slumped to a three-year low of 5.6 per cent in the first quarter (April-June) of this financial year. Exporters claim refunds worth Rs 65,000 crore in the July-October period are stuck, but the Government has denied this claim.
In the Adhia panel meeting last week, various methods of resolving the issue of blockage of funds for exporters were discussed. The committee met exporters from eight sectors, who made detailed presentations. Authorities at State Governments and the Centre were asked to clear the pending refund claims of central excise and value added tax for the pre-GST period, to give quick relief to exporters.
Despite all these complaints, export rose 10.3 per cent in August from a year before, up from 3.9 per cent in July. However, exporters say their order books are down and this would show on figures of outbound shipment in the coming months.