New Delhi, Oct 6 (KNN) The Micro, Small and Medium Enterprises (MSMEs) in the country are to bear the negative implications under the Goods and Services tax (GST), a report by India Ratings said.

According to the report, transition into the new taxation is going to significantly affect the industrial units with weak profiles, especially the small units.

Citing reasons for the statement, the report added that this impact would be due to the short-term liquidity crisis arising from the problem of delayed input credit refunds.

The report further said that the short-term liquidity crisis resulting due to delayed input credit refunds is bound to create complications for the MSMEs in mapping the inventory held on the transition date with respective invoices.

Also various GST Network-related technical issues and confusions over admissibility of these refund claims are further going to build the tension for the sector under the GST ecosystem.

The report added that the weak credit profile MSMEs might have to start borrowing from non-banking finance companies, which offer credit at a higher interest rate than banks, adding to the overall burden on the sector.

Commenting upon the impact of the change in tax regime on the large enterprises, the report informed that corporates and firms with streamlined infrastructure are likely to find it easy to transit in the One Nation One Tax regime. Since the large firms have appropriate infrastructure, these units might find an easy way into mapping the outstanding inventory with tax invoices, the report further added.

India Ratings and Research is a credit rating agency that specialized in providing credit opinions. Also it maintains eye on corporate issues, financial institutions, which includes banks and insurance companies. (KNN/DA)