An amendment in the Integrated Goods and Services Tax (IGST) in the Finance Bill has left exporters across the country worrisome. They feel it will create liquidity crunch besides high cost and transaction time.
It is worth mentioning the Finance Bill has amended Section 16(3) of the IGST Act, which earlier provided the facility to an exporter to either export on payment of the integrated tax or without payment of the integrated tax. Those who were exporting on payment of integrated tax were getting IGST refund from the customs on shipment basis without any application in a faceless manner.
Now, with the amendment in place, the process of input tax credit would involve filing the claim, uploading the documents and then getting the payment. “This will lead to considerable delay in getting payment and may take anywhere between 3-4 months,” said SC Ralhan, an exporter and president, Ludhiana Hand Tools Association.
A fairly large number of exporters are availing the IGST payment facility and they prefer to pay the IGST since the refund was quick, it was a better option, he said. “The industry is already facing liquidity problem with the blocking of Merchandise Exports from India Scheme and Service Exports from India Scheme benefits from 2019 and the aforesaid change in the Finance Bill will deprive the exporters of the facility to export on payment of IGST and its subsequent refund in an efficient manner. This will only compound the cash flow problem,” said another exporter.
Perturbed over the situation, the exporters have sought the intervention of Finance Minister so that the facility of payment of IGST could be restored.
What exactly is the amendment:
Clause 114: Amendment in Section 16 of the IGST Act
Clause 114 of the Bill inter alia seeks to amend section 16(3) of the IGST Act, 2017 so as to make provisions for restricting the zero rated supply on payment of integrated tax only to specified class of taxpayers or specified supplies of goods or services. It further provides to link the foreign exchange remittance in case of export of goods with refund .
Existing Section 16(3):
(3) A registered person making zero rated supply shall be eligible to claim refund under either of
the following options, namely: ––
(a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilized input tax credit;
or
(b) he may supply goods or services or both, subject to such conditions, safeguards and procedures as may be prescribed, on payment of integrated tax and claim refund of such tax
paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder.
Proposed Substituted Section 16(3) and new sub-section (4)::
(3) A registered person making zero rated supply shall be eligible to claim refund of unutilised input tax credit on supply of goods or services or both, without payment of integrated tax, under bond or Letter of Undertaking, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder, subject to such conditions, safeguards and procedure as may be prescribed:
Provided that the registered person making zero rated supply of goods shall, in case of non realisation of sale proceeds, be liable to deposit the refund so received under this subsection along with the applicable interest under section 50 of the Central Goods and Services Tax Act within thirty days after the expiry of the time limit prescribed under the Foreign Exchange Management Act, 1999 for receipt of foreign exchange remittances, in such manner as may be prescribed.
(4) The Government may, on the recommendation of the Council, and subject to such
conditions, safeguards and procedures, by notification, specify––
(i) a class of persons who may make zero rated supply on payment of integrated tax and claim
refund of the tax so paid;
(ii) a class of goods or services which may be exported on payment of integrated tax and the
supplier of such goods or services may claim the refund of tax so paid.
Source: tribuneindia.com
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