Skip to main content

GST maze leaves exporters sulking for refunds

GST maze leaves exporters sulking for refunds
In its 22nd meeting on October 6, the Goods and Services Tax (GST) Council had asked the government to quickly refund to exporters the Integrated GST (IGST) paid on goods exported.Finance Minister Arun Jaitley announced that refunds will start from October 10, for exports made in July, and from October 18, for exports made in August.
However, most exporters have so far not received refund of the IGST paid in July or subsequent months.The Central Board of Excise and Customs (CBEC) issuedacircular on November 7, stating that refunds of the IGST paid on export goods cannot be made in many cases due to errors in export report/manifest (EGM), shipping bill and GSTR1 returns of outward supplies for July
The CBEC said that common errors include incorrect shipping bill number in July GSTR1 (that can be corrected only through Table 9 of August GSTR1), mismatch of invoice number and IGST paid amount in the shipping bill and GSTR1, mismatch of information filed in EGM and shipping bill or nonfiling of EGM, wrong bank account details given to Customs and manual shipping bills filed at some Inland Container Depots.
However, these discrepancies do not explain why most exporters have still not received refund of IGST paid on export goods.Investigations reveal that the EDI (electronic data interchange) system of the Customs is not suitably amended to take care of the new requirements under the GST laws and that is why the refunds are delayed.

An example would make this clear.An exporter prepares his GST invoice for exports of goods worth $100. If we take the exchange rate to be Rs 65.43 per dollar, the taxable value of the goods is Rs 6,543. Now, he calculates 18 per cent IGST on the value, which works out to Rs 1,177.74. So, he rounds it up to Rs 1,178, because in accordance with Section 170 of the Central GST Act, 2017, he is required to round up the amount to nearest rupee.

However, when he files the shipping bill in the Customs EDI system, it automatically drops the paise and rounds up the tax amount as Rs 1,177. When he files his monthly return in GSTR1, the exporter enters the tax amount as Rs 1,178, according to his invoice.
When the GST Network (GSTN) sends this detail to the Customs EDI system, the tax amount does not tally.So, the exporter´s refund claim does not get processed.If this was the only problem, at least 50 per cent of the exporters, who had to ignore fifty paise or less for the purpose of rounding up to the nearest rupee, should have got their refunds.But it is not that simple.
Exporters include several items in one invoice, work out the tax amount for each, aggregate the tax amount and then round off to the nearest rupee, whereas the Customs EDI works out the tax amount for each item ignoring the paise and then sum up the tax amount for the invoices.
Here is the example: In this invoice (see chart),the exporter rounds off the tax amount to Rs 5,300 in his invoice and reports it in his GSTR1 returns. But this amount does not tally with the tax amount of Rs 5,298 in the shipping bill
As the number of items increases and tax rates differ, the difference can be more.So, the Customs EDI software needs to be amended suitably.The second problem is that the Customs EDI system does not have a separate field to capture GST Invoice number and date.The exporters have entered these details along with description of goods or at any place convenient.
Now, the exporter reports the shipping bill number and date and the corresponding GST invoice number and date in his GSTR1 returns and the GSTN sends the same details to the Customs, where there is no automatic matching of the invoice number and date.
The CBEC blames exporters for giving different GST invoice numbers and IGST amounts in the GSTR1 returns and for Customs purposes.It is possible that there are cases of wrong mention of shipping bill number or GST invoice number or IGST paid amount, but such cases are likely to be very few.
For correcting these, the CBEC has asked the GSTN to make the Table 9A of the August return available.The best course for CBEC is to disburse the IGST amount shown in the shipping bill or invoice straight away till the Customs EDI software is set right.
The Business Standard, New Delhi, 1st November 2017

Comments

Popular posts from this blog

At 18%, GST Rate to be Less Taxing for Most Goods

About 70% of all goods and some consumer durables likely to cost less

A number of goods such as cosmetics, shaving creams, shampoo, toothpaste, soap, plastics, paints and some consumer durables could become cheaper under the proposed goods and services tax (GST) regime as most items are likely to be subject to the rate of 18% rather than the higher one of 28%.

India is likely to rely on the effective tax rate currently applicable on a commodity to get a fix on the GST slab, said a government official, allowing most goods to make it to the lower bracket.

For instance, if an item comes within the 12% excise slab but the effective tax is 8% due to abatement, then the latter will be considered for GST fitment.

Going by this formulation, about 70% of all goods could fall in the 18% bracket.

The GST Council has finalised a four-tier tax structure of 5%, 12%, 18% and 28% but has left room for the highest slab to be pegged at 40%. A committee of officials will work out the fitment and the council…

Coffee-Toffee, the GST Debate Continues

Hundreds of crores of rupees in the form of taxes ride on the exact categorisation of products Is Parachute hair oil or edible oil? Is KitKat a chocolate or a biscuit? Is a Vicks tablet medicament or confectionery? For the taxpayer and the tax collector, this is much more than an exercise in semantics -hundreds of crores of rupees ride on the exact categorisation.
As the government moves closer to rolling out the goods and services tax (GST) on July 1, many such distinctions are being debated so that no ambiguity remains. Not just that, the government is revisiting old tax cases that were lost over product categorisation, according to people with knowledge of the matter, presumably with a view to making sure that revenue collections can be maximised. “In the past, several tax officers had challenged some of the product categorisations, including those in the retail segment, but lost out in court or at appellate level,“ said one of the persons. “Now we have a chance to go ahead with speci…

Deposit gush:-CA Institute Bats for Special Audit