COMMON TAX CODE

No tax refund, no working capital: How GST is hurting Indian exporters

Exporters claim that delays in refunds under the new tax code has tied up a substantial amount of their money, thus harming their businesses.

Delays in processing tax refunds under the new Goods and Services Tax regime has locked up the funds of exporters, hurting their businesses and affecting their ability to be competitive in international markets.

On September 19, a delegation of exporters met Revenue Secretary Hasmukh Adhia, who is heading a committee set up to look into the GST-related issues that India’s export sector is facing.

During the meeting, the Federation of Indian Export Organisation reportedly said that the government should fast-track the refunds process for exporters or as much as Rs 65,000 crore of their money could get stuck in the July-October period, affecting their ability to do business.

The Goods and Services Tax, which was implemented from July 1, subsumes all the indirect taxes that businesses earlier paid the Centre and states separately, with the aim of creating a common market. It involved a complete overhaul of the tax filing system.

Under this regime, companies are given the opportunity to claim refunds for the taxes they pay while buying inputs for their businesses, such as raw materials. However technical glitches, among other things, have meant that the government has repeatedly pushed back the deadline for filing GST returns, delaying tax refunds too. Exporters claim that they are suffering the most.

Earlier this month, the Union government took note of the complaints of exporters and ordered the Adhia-led committee to be set up. It has been tasked with providing recommendations to fix the problems exporters face. The committee is scheduled to meet next on October 6. However, it remains to be seen if the GST Council, headed by Finance Minister Arun Jaitley, acts on its recommendations.

Blow to exports

Indian exports were not doing particularly well in the pre-GST months of this year in the first place. The rate of export growth in rupee terms slowed during the March-July period before rising again in August. But exporters organisations now fear that this growth could be undone by the negative effects of GST.

In its presentation to the government, the Federation of Indian Export Organisation said that the exports to gross domestic product ratio, an indicator of the relative importance of international trade in a country’s economy, is down to 20% from its 2013 high of 25.43% at a time when Indian exporters are facing tough competition from countries such as China, Bangladesh and Vietnam in international markets. With the chaos following the implementation of GST, it said that it feared that the worst is yet to come.

Working capital blocked

Exporters are required to pay GST upfront for the inputs they buy from their suppliers. They can then claim tax refunds from the government, as exports are tax free.

A spokesperson from the Federation of Indian Export Organisation said that a sharp liquidity crunch has gripped the majority of exporters as their funds, paid as tax, are locked up with the government, with refunds for taxes paid for the July period only expected in December.

The process of claiming refunds is taking much more time than was envisaged because deadlines for the filing of returns are constantly being pushed back. For instance, due to technical snags in the GST portal, the government pushed the final deadline for filing the GSTR 1 return for the month of July to October 10 from the earlier deadline of August 10. GSTR 1 is a detailed compilation of all sales invoices generated by a business in a month.

According to an information booklet prepared by the government on GST for exporters, 90% of the refund amount would be processed within a week of the receipt of the refund application while the rest 10% would be paid within a maximum period of 60 days. The booklet says that “interest @ 6% is payable if full refund is not granted within 60 days”.

However, so far, no one has got refunds yet, said a tax advisor to an industry association, speaking on condition of anonymity. “The returns are not being filed in the right manner as it was anticipated, so nobody in the government is concentrating on providing refunds,” the advisor said.

A spokesperson for the Federation of Indian Export Organisation said that the government should not wait for final filings – when GSTR 1, GSTR 2, and GSTR 3 are all filed, at the end of which the total GST liability/refund is calculated. He said that the government should instead release refunds based on GSTR 3B returns. This is a simplified return that includes only a summary of invoices raised in a month instead of details of each invoice raised.

“Exporters were hoping that refunds for July will come in August but because the return dates are postponed, the refunds will not come before December,” said a spokesperson for the Federation of Indian Export Organisation. “We are saying that refunds should be given based on GSTR 3B.”

This was echoed by Suranjan Gupta, Additional Executive Director of Engineering Exports Promotion Council, a trade body sponsored by the government. Gupta said that the delay between tax filing and the processing of refunds is particularly harmful to small companies as they are forced to take additional loans to fund their day-to-day business activities. He said that these small firms often end up paying higher interest rates too.

“The long gap between payments of tax on inputs and getting refunds will make exports expensive as firms will have to borrow money to pay tax and interest,” he wrote in an emailed response. “The micro and small exporters would be particularly hit as the cost of credit to them is very high.”

Services exporters denied refunds

Software export associations such as Nasscom have their own list of grievances, which have been brought to the notice of the GST Council. Software exports are badly hit as firms that export software services are not eligible for tax refunds on the purchase of capital goods that they use to provide these services, said Bishakha Bhattacharya, Senior Director and Head – Public Policy and Government Affairs at Nasscom.

For software export companies, capital goods could include servers, computers and networking devices, among other things.

“This again seems to be an unfair denial of input tax credit,” Bhattacharya said. “You don’t have duty exemptions, which is available for others. You are also now denied refunds for GST paid on capital goods.”

A software exporter from Pune, who spoke on condition of anonymity, said that his company earlier used to save about Rs 3 crore in exemptions each year under the government’s Software Technology Parks of India scheme, established in 1991 to boost exports. Now, he claimed, his company has already paid Rs 25 lakh in import duties in a month, and is waiting for GST refunds.

In the earlier tax regime, companies part of the Software Technology Parks of India scheme were entitled to claim exemption on taxation on capital goods. This exemption is not available under GST. Thus, software exporting companies are now demanding that the government refund the taxes they paid while acquiring capital goods.

“There were various exemptions that STPI [Software Technology Parks of India] companies used to get….[But these] are now gone,” said Vidyadhar S Purandare, Secretary, Software Export Association of Pune. “They have now asked STPI companies to pay integrated GST and central GST and then claim benefits which is limited to basics customs duty. With this, the cash flow requirement has gone up.”

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Swara Bhasker: Sharp objects has to be on the radar of every woman who is tired of being “nice”

The actress weighs in on what she loves about the show.

This article has been written by award-winning actor Swara Bhasker.

All women growing up in India, South Asia, or anywhere in the world frankly; will remember in some form or the other that gentle girlhood admonishing, “Nice girls don’t do that.” I kept recalling that gently reasoned reproach as I watched Sharp Objects (you can catch it on Hotstar Premium). Adapted from the author of Gone Girl, Gillian Flynn’s debut novel Sharp Objects has been directed by Jean-Marc Vallée, who has my heart since he gave us Big Little Lies. It stars the multiple-Oscar nominee Amy Adams, who delivers a searing performance as Camille Preaker; and Patricia Clarkson, who is magnetic as the dominating and dark Adora Crellin. As an actress myself, it felt great to watch a show driven by its female performers.

The series is woven around a troubled, alcohol-dependent, self-harming, female journalist Camille (single and in her thirties incidentally) who returns to the small town of her birth and childhood, Wind Gap, Missouri, to report on two similarly gruesome murders of teenage girls. While the series is a murder mystery, it equally delves into the psychology, not just of the principal characters, but also of the town, and thus a culture as a whole.

There is a lot that impresses in Sharp Objects — the manner in which the storytelling gently unwraps a plot that is dark, disturbing and shocking, the stellar and crafty control that Jean-Marc Vallée exercises on his narrative, the cinematography that is fluid and still manages to suggest that something sinister lurks within Wind Gap, the editing which keeps this narrative languid yet sharp and consistently evokes a haunting sensation.

Sharp Objects is also liberating (apart from its positive performance on Bechdel parameters) as content — for female actors and for audiences in giving us female centric and female driven shows that do not bear the burden of providing either role-models or even uplifting messages. 

Instead, it presents a world where women are dangerous and dysfunctional but very real — a world where women are neither pure victims, nor pure aggressors. A world where they occupy the grey areas, complex and contradictory as agents in a power play, in which they control some reigns too.

But to me personally, and perhaps to many young women viewers across the world, what makes Sharp Objects particularly impactful, perhaps almost poignant, is the manner in which it unravels the whole idea, the culture, the entire psychology of that childhood admonishment “Nice girls don’t do that.” Sharp Objects explores the sinister and dark possibilities of what the corollary of that thinking could be.

“Nice girls don’t do that.”

“Who does?”

“Bad girls.”

“So I’m a bad girl.”

“You shouldn’t be a bad girl.”

“Why not?”

“Bad girls get in trouble.”

“What trouble? What happens to bad girls?”

“Bad things.”

“What bad things?”

“Very bad things.”

“How bad?”

“Terrible!!!”

“Like what?”

“Like….”

A point the show makes early on is that both the victims of the introductory brutal murders were not your typically nice girly-girls. Camille, the traumatised protagonist carrying a burden from her past was herself not a nice girl. Amma, her deceptive half-sister manipulates the nice girl act to defy her controlling mother. But perhaps the most incisive critique on the whole ‘Be a nice girl’ culture, in fact the whole ‘nice’ culture — nice folks, nice manners, nice homes, nice towns — comes in the form of Adora’s character and the manner in which beneath the whole veneer of nice, a whole town is complicit in damning secrets and not-so-nice acts. At one point early on in the show, Adora tells her firstborn Camille, with whom she has a strained relationship (to put it mildly), “I just want things to be nice with us but maybe I don’t know how..” Interestingly it is this very notion of ‘nice’ that becomes the most oppressive and deceptive experience of young Camille, and later Amma’s growing years.

This ‘Culture of Nice’ is in fact the pervasive ‘Culture of Silence’ that women all over the world, particularly in India, are all too familiar with. 

It takes different forms, but always towards the same goal — to silence the not-so-nice details of what the experiences; sometimes intimate experiences of women might be. This Culture of Silence is propagated from the child’s earliest experience of being parented by society in general. Amongst the values that girls receive in our early years — apart from those of being obedient, dutiful, respectful, homely — we also receive the twin headed Chimera in the form of shame and guilt.

“Have some shame!”

“Oh for shame!”

“Shameless!”

“Shameful!”

“Ashamed.”

“Do not bring shame upon…”

Different phrases in different languages, but always with the same implication. Shameful things happen to girls who are not nice and that brings ‘shame’ on the family or everyone associated with the girl. And nice folks do not talk about these things. Nice folks go on as if nothing has happened.

It is this culture of silence that women across the world today, are calling out in many different ways. Whether it is the #MeToo movement or a show like Sharp Objects; or on a lighter and happier note, even a film like Veere Di Wedding punctures this culture of silence, quite simply by refusing to be silenced and saying the not-nice things, or depicting the so called ‘unspeakable’ things that could happen to girls. By talking about the unspeakable, you rob it of the power to shame you; you disallow the ‘Culture of Nice’ to erase your experience. You stand up for yourself and you build your own identity.

And this to me is the most liberating aspect of being an actor, and even just a girl at a time when shows like Sharp Objects and Big Little Lies (another great show on Hotstar Premium), and films like Veere Di Wedding and Anaarkali Of Aarah are being made.

The next time I hear someone say, “Nice girls don’t do that!”, I know what I’m going to say — I don’t give a shit about nice. I’m just a girl! And that’s okay!

Swara is a an award winning actor of the Hindi film industry. Her last few films, including Veere Di Wedding, Anaarkali of Aaraah and Nil Battey Sannata have earned her both critical and commercial success. Swara is an occasional writer of articles and opinion pieces. The occasions are frequent :).

Watch the trailer of Sharp Objects here:

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This article was published by the Scroll marketing team with Swara Bhasker on behalf of Hotstar Premium and not by the Scroll editorial team.