Indian exporters have been hit hard by new tax regulations, forcing some to close as doing business becomes more difficult.
New Delhi said in June it had identified thousands of exporters that had claimed tax rebates based on bogus invoices and would require them to submit receipts before issuing refunds.
But the process has hit legitimate businesses, already struggling with a fall in orders since March amid a nationwide lockdown to slow the spread of the novel coronavirus, according to interviews with five exporters. The Federation of Indian Export Organisations (FIEO), said in a letter to the finance ministry that many businesses were being tagged as “risky” without being offered any explanation.
Some businesses had been harassed by tax officials and asked to submit up to 1,500 documents to prove they were complying with the new regulations, said Ajay Sahai, director general of FIEO. This is causing delays leading to trade volumes dipping by 2-3 per cent every month since January, resulting in a loss of billions of dollars, according to data from the trade body.