NEW DELHI: In a major relief for the export sector, the Customs
Authority has directed tax officials not to insist on proof of
realisation of exports proceeds for processing of input tax refunds.
Delay in issuance of refunds has been a sore point for exporters since
the switchover to goods and services tax (GST) regime in July 2017.
The new directive from the Central Board of Indirect Taxes and Customs
(CBIC) follows assurance from Finance Minister Nirmala Sitharaman to the
industry on easing of compliances.
The CBIC circular makes it clear that tax authorities will not insist
on proof of realisation of export proceeds for processing of refund
claims related to export of goods as it has not been envisaged in the
law.
CBIC emphasised that exports have been zero rated under the Integrated
Goods and Services Act. Hence, as long as goods have actually been
exported, even after a period of three months, tax officials should not
insist on payment of Integrated tax first and claiming refund at a
subsequent date.
There have been reports that exporters were being asked to pay
integrated tax in cases where the goods were exported more than three
months after the date of the issue of the invoice for export.
Tax experts said the circular has come at an opportune time. “The
circular has provided some key relaxations,” said Harpreet Singh,
partner at KPMG. Tax authorities will no longer insist on proof of
realisation of proceeds, or on payment of tax before refunds are
initiated when the export is delayed, he said. Also, there won’t be any
adverse action in case the order of debit on claiming refund is not
followed, Singh said.
