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Single Authority Mechanism for Processing GST refunds to Exporters soon

It is welcome news that the Goods and Services Tax (GST) Council — the all-powerful federal indirect tax body — at its meeting on September 20 is expected to approve the procedure to permit a single authority for sanctioning and processing GST refunds for exporters in a quick and an efficient manner. 

 Single authority mechanism eliminating complications faced by the taxpayers 

It is worth noting that as per the proposed single authority mechanism, once a refund claim is filed, whether Centre or State, the Tax Officer will check, review and sanction full tax refund (both Central GST and State GST portion), thus eliminating complications faced by the taxpayers. 

 The move a much-needed boost to the stressed exports sector 

The move may give a much-needed boost to the stressed exports sector, which contracted 0.37 per cent to USD 107.41 billion in April-July 2019-20 as the sector is facing challenges because of sluggish global demand and liquidity crunch. 

 The GST Council, headed by Union Finance Minister Nirmala Sitharaman and comprising representatives of all States, is slated to meet in Goa and discuss the single-authority mechanism. 

At present, the system entails a twin refund sanctioning authority, central and state tax officers. This could well change when the proposed new mechanism involving a single authority comes in place. Currently, if a taxpayer files for a refund with a Central Tax Officer, then he would clear 50 per cent of the claims, while the remaining is approved by the State Tax Officers after further scrutiny. 

The current mechanism of two authorities too much inconvenience for the taxpayers 

Many industry watchers say the current mechanism of two authorities settling the same refund claims makes the process complex and cause too much inconvenience for the taxpayers.

  Single authority would reduce litigation 

Mr. Bipin Sapra, Partner, EY, said, “A single authority for clearing the refunds would ease the burden of exporters to a large extent … It would also streamline and reduce litigation and bring more uniformity in the position taken.”


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