Chandigarh: The Central government has come to the rescue of Punjab exporters who are witnessing a delay in the State Goods & Services Tax (SGST) refund. Acting on the plea of Punjab exporters, Union Commerce Secretary Anup Wadhawan today said very soon an online mechanism would be introduced which will ensure faster SGST refund on the lines of Integrated Goods & Services Tax (IGST).

Wadhawan along with state government officials, including Punjab Additional Chief Secretary Vini Mahajan, today met exporters based out of Punjab here to discuss the problems faced by them.

“We are working on the modalities and soon an online system will be in place for faster Input Tax Credit (ITC) refund on the lines of IGST for the exporters,” Wadhawan said.

IGST refund process is online but claiming ITC refund in case of SGST still requires manual intervention. Making ITC refund online would not only ensure that the export refunds are seamless but would also make the entire process transparent and accountable.

The move will not only reduce the burden of the taxpayers but also of taxation professionals who currently have to deal with two departments – State and Centre – separately for the refunds.

Not only in Punjab, but exporters from other states are also facing delay in ITC refunds (also called SGST) in their respective states. The prime reason behind the delay is shortage of funds, as cited by the tax officials.

Already facing slowdown in the exports market, the Punjab-based exporters were largely hit as VAT refunds are also pending with the tax department. The delay in refund has hit the working capital of manufacturers and outbound shipments. Since SGST contributes significant portion of the raw material cost, it’s affecting the industry.

“Exporters always face delay in SGST refunds as the state government officials blame it on the paucity of funds. Compared to SGST, the refund in case of Central Goods & Services Tax (CGST) is faster,” said Sarvjit Singh, director, Man International, Ludhiana.

Due to delay in refunds and paucity of funds, many manufacturers are looking to meet their working capital requirements through private financing as they have already exhausted their bank limits.

In December last year, Punjab Finance Department had released Rs 270 crore for pending refunds related to GST and VAT of traders and industrialists. While Rs 214 crore was released on account of VAT refund to nearly 2,500 beneficiaries, Rs 56 crore was released as GST refund for 1,600 beneficiaries.

Various other issues such as delay in duty drawback, banking issues, like caution listing of exporters, third party/third country exports and list of items to be traded with Iran, were also discussed.

(Except for the headline, this story has not been edited by The Kashmir Monitor staff and is published from a syndicated feed.)