Exporters Facing Difficulty in Claiming GST Refund

Concept of GST Refund for Exporters:

Every exporter in India has been provided with certain exemptions from taxes on goods and services in order to encourage foreign trade. GST Refund means when a taxpayer having a GST Registration, can ask for refunds from taxation authority in cases of excessive tax paid by them. These refunds are due on the taxation department which they are liable to pay if they find the documents supporting the claim accurate and correct. In the case of exporters, they can file for GST Refund only in the following mentioned cases:

  • When the Integrated Goods and Services Tax (IGST) has been paid by the exporter.
  • When the taxes are been paid on goods that are zero-rated or are considered as deemed exports.
  • When the exporter has not availed Input Tax Credits.
  • When exports are made without paying integrated taxes under the Letter of Undertaking (LUT) or a bond.

For claiming GST Refunds in case of exports, the owners are required to file the following forms:

  • Details of exports filed in FORM GSTR-1.
  • FORM GSTR-3B is to be filed as well.
  • The shipping companies have to file an Export General Manifesto.

Issues in Claiming GST Refund by Exporters:

There are certain issues that exporters are facing on the part of filing for refunds during the whole GST Refund process which can be a hindrance in receiving any refunds. These issues are-

  • When the exporter has not filed FORM GSTR-1 or TABLE-6A of the FORM GSTR-1.
  • When the exporter has not filed the FORM GSTR-3B.
  • If the FORM GSTR-1 has been incorrectly filed.
  • If FORM GSTR-3B has been filed incorrectly.
  • When the shipping bill has been filed incorrectly.
  • When the shipping bill of the courier has not been updated in the system of the custom department.
  • When there is confusion about the exchange rates.
  • When the Input Tax Credits claimed is adequate or not correct.

Difficulties faced by Exporters in claiming GST Refund:

The whole process of GST Refund is automated. And due to sudden changes in the rules and regulations regarding the GST Refund Process the exporters are quiet confused about the claiming of the refunds. Here are some problems and difficulties that the exporters are facing in India while filing for a GST Refund:

  • Business claiming refunds fraudulently has created mistrust for other exporters who genuinely claim it.
  • Manual checks are being introduced in this automated process to seek any tax evasions making it little lengthy and time constraining.
  • The policies of the GST Refund process has to be changed for making it more transparent but it is creating confusion among the taxpayers.

Online process has made the claiming process easier but it also became a platform for certain exporters to wrongly claim ITCs and refunds on returns which make it more difficult for other claimants because they have to undergo a more complex process and scrutiny now.

Author: Anil Agrawal
EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.