This is part of the NDA government’s initiative to make it easy to do business in the country and the scheme will cover companies that have a good tax record. It will enable these companies to get service tax refunds as and when they claim them without having to go through the time-consuming and cumbersome process of first getting these claims scrutinised and audited. These claims will undergo the normal scrutiny process but the refunds of these companies will not will not be held up till the process is completed.
For the past 4-5 years, delay in refunds has been a huge issue in the industry with repeated attempts to resolve it through directives, making no improvement. Huge amount of tax refunds of services exporters are pending with tax authorities, especially in the IT and ITeS sector.
The current proposal, under discussion, could work on the lines of Accredited Client Programme in Customs. It allows clients assessed as highly compliant assured facilitation in clearances by the risk management system. Soon, a directive is expected to be issued after the new framework is finalised.
It is pertinent to mention here that blocked refunds have particularly hurt smaller companies.
A structural overhaul in the system can address the systemic issues, say experts.