14 Mar 2018Posted By: Mudit Handa

Why 70% of exporters� refund claims still stuck even after 8 months of GST regime?

No economic reform has been as drastic and sweeping in the history of independent India as the advent of GST. No doubt, today GST registration assists millions of small and medium scale entities by simplifying the compliances and mitigating the surmounting tax liabilities that hindered the progress of small businesses in India.


Despite numerous measures supportive of export promotion and ease of doing business, a few procedural holdups and policy logjams such as blockage of GST refunds have posed bottlenecks to smooth economic growth.   

So, what is the root of these key hold-ups, especially the impasse in refund process, that is weighing down the exporters in India? Let us discuss it in detail:

What is the reason behind the Deadlock of the Refund procedure?

One of the most aggravating issues encountered by the small traders and exporters relates to blockage of refunds claimed by them. These are the highpoints of relevance in this regard:

  • As reported by the Central Board of Excise and Customs (CBEC) a large sum of INR 5,000 crore has already been endorsed for paying off refunds to the traders. Paradoxically, in so far as 70% of the total refunds to the tune of INR 10,000 crore to exporters are still jammed even after 8 months of GST implementation.   


  • It is well known that Indian government has set up a string of Special Economic Zones (SEZs) throughout India in order to boost the exports, where the trade had hitherto been fully conducted on a zero-rated basis.

  • Post GST implementation, the IGST was made obligatory on all movement of goods in SEZs. As a result, many exporters located in SEZ zones were taken aback by the tax liability that arose out of the blue. As per the Advance Authorization schemes, EPCG and EOU schemes, the interstate supplies are recognized as 'deemed exports', thus the exporters are entitled to the refund of GST they have paid on inputs for manufacturing.

  • The system is currently witnessing numerous grievances from the exporters related to blockage of refund of the input credit. The authorities are laying the responsibility of the existing policy log-jam at the door of the naïve exporters who are a novice at the GST registration procedure and the GST Return Filing online process. According to GSTN, certain discrepancies in the details furnished by the exporters in returns like GSTR 1 & 3B or Table 6A have led to procedural holdups.


As stated by CBEC, e-mails have been sent to the exporters regarding the correction of their records through amendment feature in GSTR 1 i.e. under GSTR 1 Table 9.

What can be the conclusion, then?

On a very serious note, the technical faults and hitches existing in the system must be duly addressed as to alleviate the complexities faced by the exporters.


What are the measures taken by the government in this regard?

  1. As a step forward for mitigation of exporters' ambiguity regarding GST refund, revenue authorities have decided to hold fortnight-long orientation camps across India from March 15 till March 29. The exporters will be guided on rectification of errors and successful execution of refund process in this open conclave.  

  2. Additionally, CBEC has stated that efforts are being made to inform registered exporters on a real-time basis as regards the slip-ups on ICEGATE portal.

  3. Besides, the details of refund procedure are being sent via SMS on ICEGATE-linked mobile numbers.


However, a unique Import Exports code can take the edge off the worries of exporters to much extent.  


If you need any help regarding GST registration procedure or IEC Registration, feel free to contact us at 8881-069-069.


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