Indore: Govt hints at introducing e-wallet for GST hit exporters

Indore: Government may consider introducing e-wallet to give relief to exporters from glitches of the GST.  Micro and small exporters are particularly the bad hit, as the availability of credit and more so, the cost of credit is adversely impacting them. According to sources, many are now on the verge of borrowing money to pay GST.

The suggestion of this regard was given by a delegation of Federation of Indian Exporters Organisation (FIEO) led by its chairman and director general when it met finance minister Arun Jaitley last week in New Delhi to discuss the issue. Official sources informed that the government may consider the e-wallet programme, which will credit e-currency to an exporter’s account based on preceding year’s export and an average GST rate. Like a running account, money may be debited from the e-wallet when duty paid supplies has to be undertaken and the amount may be credited when the proof of exports is made available from ICEGATE, the sources added.

We have been given to understand that such a mechanism may work through the GSTN though the software would require some modification. Industries feel that such a proposal is feasible to implement and will address large concerns of the exporters. If such a proposal is accepted, the problem of merchant exporters of procurement of goods, meant for exports, from manufacturer as well as the issue of manufacturers of inputs through domestic procurement or imports will be addressed, said an official of the delegation wishing anonymity.

Exemption for merchant exporters

Convener of FIEO MP-CG chapter, Suber Rampurawala informed that the merchant exporters account for over 30 per cent of the country’s exports, who usually work on razor thin margins of 2-4 per cent. The imposition of GST has made their costing haywire, particularly for products having higher GST rate, as they have to pay GST and seek refund after some time lag. Many of them have stopped entering into new contracts, which will adversely impact country’s exports in next quarter. Merchant exporters were availing exemption from central and state taxes under pre-GST regime and same exemption may be provided under the GST regime as well against an electronic bond. Exports of tiles, handicraft, textiles, and agri-commodities may witness decline as such sectors are dominated by merchant exporters, he said.

Fund shortage of MSME exporters

Most of the exporters, particularly from MSME category, hardly have financial wherewithal to pay GST liabilities for three months without having refund in the meantime. In the given situation, exporters may be provided GST refund (both IGST as well as ITC) based on GSTR-1 & GSTR-3B so that the cash flow to export sector is maintained. GSTR-3B already captures the details of zero rated outward taxable supplies (export related supplies), ITC available for the month and payment of GST made during the month. These details are adequate to provide IGST refund as well as ITC refund on exports, as the case may be. The filing of GSTR-1 would ensure that exporter has reflected his output liabilities as well.

Amendment for goods manufactured in SEZs

Similar problem is being faced when the merchant exporter exports the goods manufactured by SEZ unit, as clause 10(d) of the Notification 131/2016 dated 31st October, 2016 disallow drawback on goods manufactured by any unit in SEZ. The ministry of finance may be asked to modify the aforesaid condition in the above referred Notification.


FIOE apprised FM Jailtey that as per the existing provision, the refund would flow to the exporters only after filing of GSTR-1, 2 & 3, provided the EGM in respect of such exports have also been filed. The extended time provided for filing for GSTR-1 for the month of July, 2017 now is extended till 10th of October this year. Therefore, in case the exporter wants to file for refund, he has to wait at-least till the time, as the auto-populated entries in GSTR-2 will be available only after October 10. If the exporter files GSTR-3 by 15th of October and applies for ITC refund, 15 days time is available for issuance of acknowledgement while seven days time limit is given for 90 per cent of the refund. Therefore, even in the best of situation, ITC refund would not be available before 1st week of November. In short, exporter would, in the meantime, be paying GST liabilities for the month of July, August and September, 2017, the delegation explained to the finance minister.

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