In my previous articles, I have articulated the process to claim export refunds. The process will help exporters to seamlessly claim export refunds and also minimise errors.
There are also sometimes issues in transmission of export data to ICEGATE due to which export refunds don’t get processed and we discussed how to relieve them.
The government also has taken measures to give out timely refunds. Still, there have been many cases of fraudulent GST refunds and export frauds. The export frauds mainly occur due to the following:
1. Untraceable Exporters: While analysing the GST Refund data, the government has unearthed many fake entities that only exist in the virtual world. The documents do not match government records, are either fake or morphed. These firms create a fake web of invoicing among non-existent entities to affect exports and then claim Input Tax from the exchequer.
2. Overvalued Exports: In fraud identification, exchequer identified that few exporters, overvalued the exports to exorbitant levels. The modus operandi indicates over-valuation of the market value of the goods exported to SEZ and claiming of refund of the input tax credit through fraudulent means.
So, the government has proposed some amendments to curb export frauds related to refunds.
Recently, there has been a considerable increase in untraceable exporters who claim fake refunds or show more value while claiming refunds. To counter this misuse, the government has proposed a cap on the value of exports and recovery of refund along with interest if proceeds from exports are not realised within a certain time frame.
1.Capping the value of exports:
The turnover of zero-rated supplies should not be more than 1.5 times the value of similar goods in the domestic market.
For example: If a registered person wants to export some goods, the value of such goods in the domestic market is say Rs. 1,000 then while exporting the supplier cannot charge more than Rs. 1,500.
Although the government looks at this as a preventive measure, many experts say that there may be some exemptions or some more clarifications on this measure in the near future.
2. Mandating repayment of refunds by exporters:
In case export proceeds are not received within the maximum permissible time as per the Foreign Exchange Management Act (FEMA), then the exporter should deposit the refund of input tax credit received on such exports. This refund should be made along with interest. The maximum permissible time as per FEMA varies from six to 12 months.
This proposal of the government has also received some mixed reviews. Some experts say that the exporter can be in loss due to this proposal while some say that this would help the government to trace export frauds.
These are proposed amendments to curb the export frauds. The government will shortly notify these proposals.
IRIS Sapphire – A product of ‘IRIS GST’ helps with seamless GST Return Filing and Reconciliation by automating the entire process.
IRIS Sapphire, an easy to use GST Compliance Software, is trusted by more than 850+ business houses across the country for simplified GST filing. IRIS GST is an authorised GST Suvidha Provider (GSP) in India. Along with offering basic features like GST Compliance Tracker, Bulk Operations, Vendor Management and so on, IRIS Sapphire also offers value-added services like:
- Know Your Monthly ITC
- Smart Reconciliation
- Download data for all your GSTINs in one go
- GSTR 6, GSTR7, GSTR 8 and GSTR 2X enabled
- Automated GSTR 9 Preparation
- GSTR 3B auto-population from filed GSTR 1 and GSTR 2 return
- Take Actions on GSTR 1 data
Still, need more reasons to choose IRIS Sapphire? Here are more!
- It is a complete ASP+GSP Solution
- Is 100% Secure and Scalable
- Offers excellent Customer Support with expert team members
- Agile Product Development
- Built-in Analytics & Dashboards
- Cloud-Based Software