Exporters to get full VAT refund in 3 months

NEW DELHI: Exporters will get full refund of the value added tax (VAT) within three months from the date on which they pay the new levy.

In line with the policy of not taxing exports, units located in special economic zones (SEZs) and export-oriented units (EOUs) will be exempted from VAT, which is set to be ushered in on April 1. In case exemption is not possible, refund will be provided within 3 months, according to the white paper on value added tax (VAT).

The rules framed out for exports under the VAT framework are in line with the government’s attempt not to export taxes, indicates the white paper on VAT. As of now, exporters do not pay sales tax and they use ‘H form’ instead of the usual ‘C form’ to avail the exemption.

“Exporters should not be asked to pay VAT and then take refund. It will be better to exempt exporters from payment of VAT,� said RK Dhawan, northern region chairman of the Federation of Indian Export Organisation (FIEO).

Exporters should not be forced to block their money by paying VAT and waiting for refund, he said. The view of exporters is that it is not easy to obtain refunds from government departments and the process would only lead to corruption.

Rather than the prescribed three months, they feel, refunds will take six months. An instrument similar to the ‘H form’ for sales tax exemption should be introduced for VAT too, Mr Dhawan said. There is no point in paying the tax and waiting for refunds, he added.

SEZ units and EOUs enjoy sales tax exemption and a similar facility should be provided to them under VAT too, Mr Dhawan said. Exporters had submitted detailed requests to the government on the need for total exemption and a representation was submitted along with the Budget wish list too.

In the case of central taxes like customs and excise, exporters have the option to go in for exemption on inputs or seek refund after exports are completed.