To curb tax frauds, automated refund of Integrated GST (IGST) on the export of pan masala, tobacco and similar other items will be restricted from October 1, the finance ministry has said.
Exporters of such items will have to approach jurisdictional tax officers with their refund claims for approval, it said in a notification dated July 31. The changes in the notification will come into effect from October 1.
The issue of fake invoicing and fraudulent exports for claiming undue refunds was discussed by the GST Council which had suggested that for commodities like pan masala, gutkha, chewing tobacco, and similar other goods, the IGST automated refund route on exports be closed.
The items on which automated IGST refund restriction has been imposed include pan masala, unmanufactured tobacco, hookah, gutkha, smoking mixtures for pipes and cigarettes and other items, including mentha oil. Such items attract 28% IGST, plus a cess.
Restricting IGST refunds may lead to a temporary increase in tax revenue for the government, as the refund amount will remain with the government for a more extended period.
The GST authorities have detected Rs 3.33 trillion in tax evasion during the last five years, of which Rs 1.08 trillion has been recovered, the finance ministry told Rajya Sabha recently.