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Single authority for sanctioning, processing GST refunds likely by August

The current mechanism for refund processing and sanctioning has two authorities consisting of central and state tax officers.

Once a taxpayer files refund claim with the jurisdictional tax authority, say the central tax officer, then he would clear 50 per cent of the claims and;

The remaining claim of refund is processed after further scrutiny which is to be made by the state tax officers.

When the two authorities (Central GST and State GST) process, settle and sanction the refund claim of the same person it burdensome to tax authorities as well as create unnecessary complexities and inconvenience for the taxpayers also.

Thus, the entire two time scrutiny process leads to longer time and liquidity crunch for exporters.

To make such sanctioning process simplified, the government is in the planning to bring a new structure in which a single authority will sanction the refunds.

As per new system which will be called as “single authority mechanism”, Through this the taxpayer will claim the refunds with his jurisdictional officer and once it will be sanctioned, taxpayer will get full refund (both Central GST and State GST portion).

However, the process of settlement of amount among centre and state tax authorities will be held at the back-end i.e. through internal account adjustments.

This proposed new “single authority mechanism” will speed up and simplify the process of refund for exporters.

GST council has decided that state tax officials administer and control 90% of the assessees having annual turnover below Rs 1.5 crore and the remaining 10 % is with the central tax officers.

The Centre and states share control of those assessees with annual turnover of over Rs 1.5 crore in 50:50 ratio.

Author: Niranjan Reddy

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