Single authority for sanctioning and processing GST refunds in offing, new structure to come up likely by August

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New Delhi: A single authority for sanctioning and processing GST refunds is within the offing because the Finance Ministry seems to hurry up and simplify the method for exporters, an official mentioned.

The present mechanism entails a twin refund sanctioning authority of the central and state tax officers however that would nicely change by August when the proposed new construction involving a single authority is available in place.

As per the system being labored out by the Income Division, the taxpayer will get full refund from his jurisdictional officer as soon as the declare is sanctioned, whereas on the back-end the Centre and states will apportion the quantity to be paid to one another.

At present, as soon as a taxpayer information refund declare with the jurisdictional tax authority, say the central tax officer, then he would clear 50 p.c of the claims, and the remaining is cleared by the state tax officers after additional scrutiny.

An identical system is adopted when a taxpayer approaches the state tax officers for Items and Providers Tax (GST) refunds. Thus, the time taken to clear all the refund quantity will get longer, resulting in liquidity crunch for exporters — a problem that the proposed single mechanism for refund clearing intends to repair.

 Single authority for sanctioning and processing GST refunds in offing, new structure to come up likely by August

Representational picture. Information18.

Underneath the proposed ‘single authority mechanism’, as soon as a refund declare is filed with a tax officer, whether or not Centre or state, the officer will examine, assess and sanction full tax refund (each Central GST and State GST portion), thereby eradicating difficulties confronted by the taxpayers. This may later get adjusted/settled amongst the 2 tax authorities by way of inner account changes.

At present, the 2 authorities settling the identical refund claims provides to pointless complexities and inconvenience for the taxpayers. It has been seen that even after sanction/cost of refund by involved jurisdictional tax officer, the counterpart tax authority at instances tends to delay the GST refund.

As per the formulation for division of GST assessees determined by the GST Council, state tax officers administer and management 90 p.c of the assessees under Rs 1.5 crore annual turnover, and the remaining 10% is with the central tax officers.

The Centre and states share management of these assessees with annual turnover of over Rs 1.5 crore in 50:50 ratio.

Commenting on the transfer, AMRG & Associates Companion Rajat Mohan mentioned: “A single window tax refund in a federal, democratic economy would be a massive jump in ease of doing business. Inter government tax adjustments have to be done on month-on-month basis to avert any possibility of temporary revenue deficit to a particular government.”

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