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Micro, Small and Medium Enterprises (MSMEs) have got some relief with Finance Minister Nrimala Sitharaman announcing that pending GST refund dues will be paid within 30 days.
In addition, all GST refunds will be paid within 60 days from the date of application. However, some believe since delays mostly happen at state levels, this kind of a timeline for refund seems impractical.
Speaking to reporters, the Minister for Micro, Small and Medium Enterprises (MSME) Nitin Gadkari welcomed the decision and said “the move would be beneficial for the sector”.
According to sources, an average of ₹7,000 crore GST dues are pending. However, the exact quantum of such dues could not be ascertained.
Praveen Khandelwal, Secretary General, Confederation of All India Traders (CAIT), said, “ The announcement of pending GST refunds within 30 days to MSMEs will release stuck capital of traders with the Department. This flow of the money in the market will give the desired breather to the sector.”
However, Anil Bhardwaj, Secretary General of Federation of Indian Micro Small and Medium Enterprises (FISME), said release of refunds in such short span of time looks to be impractical.
“Most of the delays happen at the State level so either the Centre has to come up with some mechanism or would need to set up a committee,” he added.
According to the Finance Ministry, around ₹60,000 crore is to be released for delayed payments out of which ₹30,000 crore would be an upfront release. The major share of the delayed payments is in the MSME sector.
“This initiative of the government will further help the trade and industry to overcome their problem of liquidity and capital requirements,” said Sharad Kumar Saraf, President, Federation of Indian Export Organisations.
Meanwhile, as the government has plans to come up with a single definition of ‘MSME’, Gadkari said that amendments in the definition of this sector is under serious consideration and some announcement in this regard may happen in the next 10-15 days.
“It’s been nearly 12 years since the definition of MSME was changed last. So it definitely needs a revision,” added Bhardwaj.
The MSME Ministry is also aiming to increase the share of the sector to 50 per cent in the Gross Domestic Product (GDP) in the next 5-7 years. Currently, the sector contributes to 29 per cent of GDP.
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