The directorate general of foreign trade (DGFT) is working out the amount of credit an exporter will initially need. E-wallet is essentially a notional credit and will not hit the exchequer, as it is not backed by actual money. “The government will not have to put in anything. It will be all notional, based on the exporter’s record with DGFT,” said Revenue Secretary Hasmukh Adhia.
Based on an exporter’s past record, DGFT will decide the amount of inputs he or she is buying, based on which how much tax one will have to pay on inputs will be calculated.
“You can transfer it to anyone with an e-wallet. Even a trader can have an e-wallet and receive credit from an exporter and use it to pay GST.
Notional credit can be used to pay CGST and IGST,” said Adhia.
The account will be replenished when one gets the refund and will stay with him. “With this, there will be no working capital blockage and no interest liability for exporters,” Adhia added.
Exporters have complained of working capital constraints. due to the slow rate of refunds on IGST by the government. In a relief for exporters till the e-wallet becomes functional, the GST Council, chaired by Finance Minister Arun Jaitley, decided to lower the IGST for merchant export to a nominal 0.1 per cent till March 31.
In the pre-GST regime, no tax was charged at the time of export. Now, IGST needs to be paid, which exporters may claim as refund while filing returns. Amid constant complaints of working capital blockage, the GST Council decided to expedite refunds for exporters. Since October 10, the government has refunded around Rs 200 crore of IGST paid on export in July, of a total claim of Rs 750 crore. About Rs 67,000 crore has been collected as IGST, from which refunds to exporters are estimated at about Rs 2,000 crore for July and August.