State governments have effectively stopped paying tax refunds under the duty drawback scheme (DDS), compounding their liquidity issues, say exporters.

Since the Goods and Services Tax (GST) regime was introduced on July 1, they allege, getting refunds for the state component of the levy has become very difficult under the DDS, with the requisite mechanism not in place. "While it is still possible to get states to pay for their share of refunds under the Integrated GST, those refunds which are to be paid fully by them are not materialising," said Ajay Sahai, ...