VAT refunds for exporters are still pending in multiple Indian states, causing financial strain and operational difficulties for businesses heavily reliant on timely reimbursements to maintain their cash flow. Despite several policy announcements and circulars by both the central and state governments aimed at streamlining the refund process, exporters continue to report delays due to procedural bottlenecks, technical system glitches, and bureaucratic hurdles. These delays undermine the competitiveness of Indian goods in the international market, as exporters are forced to lock up their working capital for extended periods.

One of the main reasons for the ongoing delays lies in the disjointed implementation of VAT refund mechanisms at the state level. Different states follow varied processes and timelines, and there is often a lack of synchronization with the central tax authorities. In many cases, pending audit requirements or minor documentation errors have led to long hold-ups, despite exporters submitting all necessary papers. Additionally, some states lack robust IT infrastructure to efficiently process refund claims, adding to the burden on tax officials and delaying outcomes for applicants.

Exporters’ associations and industry bodies have repeatedly appealed to both state and central governments to address this issue on a war footing. They argue that delayed refunds not only erode profitability but also dent trust in the tax administration system. As the country pushes for enhanced exports to boost economic growth, the persistent problem of VAT refund delays presents a serious policy contradiction. A more harmonized and transparent process, backed by real-time digital tracking and strict accountability for delays, is critical to restoring confidence and supporting the growth of India’s export sector.