The government’s decision to provide a 90% upfront refund to exporters under the Goods and Services Tax (GST) framework faces a delay as it requires a change in the current law. The GST Council announced this measure as a structural change to ease the financial burden on small businesses and exporters, especially amid the 50% US-imposed tariff. The Centre is now considering an ordinance to fast-track the process and has asked the GST Council’s law committee to review it.
The current law, specifically Section 54 of the Central GST Act, lacks a provision for risk-based provisional refunds. This issue is particularly complex for industries with an inverted duty structure, such as textiles, chemicals, fertilizers, and pharmaceuticals. The proposed change, once implemented, will bring immediate relief to these sectors by unlocking their blocked working capital.
The law committee is also working on a definition of “risky taxpayers”. The upfront release of refunds is a significant step aimed at enhancing the overall trade environment.