Lok Sabha Question No. 1760 (UNSTARRED), answered on 2018-07-27
Subject: Refunds to Textile Exporters
Ministry: FINANCE
Asked by: RAVNEET SINGH

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

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## LOK SABHA UNSTARRED QUESTION No. 1760 TO BE ANSWERED ON FRIDAY, JULY 27, 2018/Shravana 5, 1940 (Saka)

## REFUNDS TO TEXTILE EXPORTERS

## 1760. SHRI RAVNEET SINGH:

- Will the Minister of FINANCE be pleased to state: (a) whether the Government has undertaken any new initiatives to ensure quicker tax refunds for business owners, especially the ones engaged in the textile export sector, if so, the details thereof; (b)  whether the Government has received multiple representations of businessmen about the difficulty in processing previous tax refunds, if so, the details thereof; (c) whether the Government is aware that various textile related subsidies have been impacted post  implementation  of  GST  thus  making  textile  export  more  expensive  and  as  a  result  noncompetitive in the international market; and
- (d) if so, the details thereof and the follow-up action plan for the textile sector?

## MINISTER OF STATE FOR FINANCE (SHRI SHIV PRATAP SHUKLA)

(a) Yes Sir. The Government has taken the following initiatives to ensure quicker tax refunds for business owners, especially the ones engaged in the textile export sector:-

- i. Deemed Exports: Vide notification No. 48/2017-Central Tax dated 18.10.2017, the following categories of supply of goods have been declared as deemed exports:-
- supply of goods by a registered person against Advance Authorization
- supply of capital goods by a registered person against Export Promotion Capital Goods Authorization
- supply of goods by a registered person to Export Oriented Unit
- supply  of  gold  by  a  bank  or  Public  Sector  Undertaking  specified  in  the Notification  No.  50/2017-Customs,  dated  the  30 th June,  2017  (as  amended) against Advance Authorization.

Further, rule 89 of the Central Goods and Services Tax Rules, 2017 (CGST Rules, 2017 for short), as amended vide Notification No. 47/2017- Central Tax dated 18.10.2017, allows either the recipient or supplier of such supplies to claim refund of tax paid thereon.

- ii. Merchant  Exporters:  Vide  notification  No.  40/2017-Central  Tax  (Rate)  dated 23.10.2017,  intra-State  supply  of  taxable  goods  by  a  registered  supplier  to  a merchant exporter for exports shall attract central tax (CGST) rate of 0.05%. Vide notification 41/2017-Integrated Tax (Rate) dated 23.10.2017, inter-State supply of

taxable goods by a registered supplier to a merchant exporter for exports shall attract  integrated  tax  (IGST)  rate  of  0.1%.  This  will  reduce  capital  blockage  for exporters.

- iii. Refund Fortnights: In order to swiftly process pending GST refunds, the Central Board  of  Indirect  Taxes  and  Customs  (CBIC)  has  successfully  concluded  the following three refund fortnight cum special drives:-
- First refund fortnight from 15.03.2018 to 31.03.2018: A total of Rs 4,265 crores  IGST  refund  was  sanctioned and  a total of  2,28,829  shipping bills were disposed of. In respect  of  RFD-01A  applications filed  for  refund  of unutilized input tax credit, an amount of Rs. 1,136 crores was sanctioned.
- Second  refund  fortnight  from  31.05.2018  to  16.06.2018:  A  total  of  Rs. 6,087 crores IGST refund was sanctioned and a total of 1,68,191 shipping bills were disposed of. In respect of RFD-01A applications filed for refund, an amount of Rs. 1,548 crores was sanctioned.
- Third refund fortnight is ongoing from 16.07.2018 to 30.07.2018.
- iv. Textile Exports: GST Council, in its 28 th meeting held on 21 st July, 2018, decided to allow  refund  of  accumulated  input  tax  credit  on  account  of  inverted  duty structure to fabric manufacturers.

(b) The Government has received various representations from trade and industry regarding the issues in processing of refunds such as delay in sanction and disbursal of refund, clarity about the  formula  for  maximum  refund  allowed  under  rule  89(4)  and  rule  89(5)  of  the  CGST  Rules, 2017.  The  Government  has  clarified  these  issues  through  various  Circulars,  Notifications  and awareness campaigns using both print media and social media.

(c)  and  (d)  After  implementation  of  GST,  various  state  levies  and  central  indirect  taxes  were subsumed under GST. Therefore, the rates of Rebate of State Levies (RoSL) and Duty Drawback were suitably adjusted. In order to support exports, the Government has taken various steps as mentioned below:

- i. Revised rates of RoSL and Duty Drawback were introduced with effect from 01.10.2017.
- ii. To avoid working capital blockage and support exports, exporters have been exempted from  upfront  payment  of  integrated  tax  for  import  of  machinery  under  EPCG  (Export Promotion for Capital Goods) scheme upto 01.10.2018.
- iii. MEIS  (Merchandise  Exports  from  India  Scheme)  rates  for  apparel  and  made-ups  were increased from 2% to 4%.