NPCI, NSDL in fray to develop e-wallet for exporters
The National Payments Corporation of India (NPCI) and the National Securities Depository Ltd (NSDL) are in the fray for operating the proposed e-wallet system for exporters under the goods and services tax (GST) regime.
The government is yet to decide on the agency that will develop the notional credit system to help exporters with working capital flow. GST Network (GSTN), the information technology backbone of GST, is also being considered for this.
In the government’s push for a cashless economy, NPCI developed the Bharat Interface for Money (BHIM) app for making payments, available for customers of 55 banks across the country. NSDL, the country’s first and largest depository, handles most of securities held and settled in dematerialised form. It is also a GST Suvidha Provider, which facilitates filing of returns.
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 ewallet 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 preGST 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 ~200 crore of IGST paid on export in July, of a total claim of ~750 crore. About ~67,000 crore has been collected as IGST, from which refunds to exporters are estimated at about ~2,000 crore for July and August.