GST- All tax exemptions will move to refund mechanism

By | October 15, 2016

Government works on ironing out benefits refund mechanism for exporters

Oct 15, 2016,

NEW DELHI: A new plan is in the works to help exporters shift smoothly to a refunds-based mechanism when the goods and services tax (GST) kicks in. At present, exporters get tax sops upfront.

India’s exports sector is facing pressure due to slowdown in global demand, and officials feel any disruption in benefits being offered to exporters when the singletax system becomes operational could further dampen exports.

A senior official told ET the commerce department has already made representations to the finance ministry and both have held two rounds of talks on the issue. The GST council had, at its last meeting, taken a decision to move to refund-based mechanism for area-based excise duty exemptions available to many states.

The same principle is expected to be extended to all export sops. “All tax exemptions will move to refund mechanism…This is to keep the new tax structure as neat as possible,” the official, who did not wish to be named, said. Under the refund mechanism, the good or service will be priced as in the regular course and the tax benefit will be subsequently reimbursed by the government to ensure that the GST structure is not distorted by incentives and exemptions. The official, however, said the transition process will be worked out by a committee to ensure it is smooth.

The exports sector gets several the Centre should refund all components of tax and debit the requisite amount from states. “Government needs to send out a strong signal that exports are important… There are global examples for exemption under GST…European Union has given exemption to exports,” Sahai said.
Currently, imports under advance authorisation and export promotion capital goods (EPCG) licences can be done without payment of any customs duty. “If GST of around 18% is made applicable on such imports (basic customs duty is likely to be exempt, as it is outside GST ambit), then it would lead to huge cash flow issues for the industry,” said Pratik Jain, partner and national leader (indirect taxes) at PwC India.

“If this is a policy decision, then industry would at least expect that exemption continues for the licences which are already in existence. Refund process should be efficient and amount of GST paid should be refunded in a timely manner.”


Free Education Guide on Goods & Service Tax (GST)


Topic -GST



Model GST Law

Model GST Law


GST Overview

Goods and Services Tax (GST): An Overview

Integrated Goods & Service Tax (IGST) Act Overview

Meaning and Scope of Supply

Time of Supply

Place of Supply of Goods and Service under GST

Valuation in GST

Levy of GST & Exemption from Tax

Job Work under Goods & Service Tax (GST)

Electronic Commerce under Goods & Service Tax (GST)


Transition to GST

Transitional Provisions in Goods & Service Tax (GST)



GST Registration FAQ’s

GST Registration Process -Video

GST -Draft Registration Rules

GST -Draft Registration Formats



GST Draft Invoice Rules released by CBEC

GST Draft Invoice formats Released by CBEC


Input Tax Credit

Input Tax Credit under Goods & Service Tax (GST)

Concept of Input Service Distributor in Goods & Service Tax (GST)



GST Payment of Tax

GST Draft Payment Rules Released by CBEC

GST Draft Payment formats Released by CBEC



Refund under GST

Draft GST Refund Forms released by CBEC

Draft GST Refund Rules released by Govt



Returns Process and matching of Input Tax Credit under GST

Draft GST Return Rules Released by Govt

Draft GST Return Formats released by Govt


Assessment and Audit

Assessment and Audit under GST


Inspection, Search, Seizure and Arrest

Inspection, Search, Seizure and Arrest under GST


Offences, Penalty, Prosecution & Compounding

Offences, Penalty, Prosecution & Compounding in GST


Demands and Recovery

Demands and Recovery under GST


Appeals and Review

Appeals, Review and Revision in GST


Advance Ruling

Advance Ruling in Goods and Service Tax (GST)


Settlement Commission

Settlement Commission in Goods and Service Tax (GST)


GST Portal

Frontend Business Process on GST Portal

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