Refund rules under GST will adversely impact MSMEs, interest on refunds should start within 10 days: FIEO

New Delhi, May 26 (KNN) The tax refund mechanism that is proposed under the upcoming GST regime may have an adverse impact on the Micro, Small and Medium Enterprises (MSME), export body Federation of India Export Organization (FIEO) recently said.

Under the GST draft, the rule for refunds is that 90 per cent of the refund claim will be disbursed within seven days, and the remaining amount will be refunded later. This will hurt the MSME exporters as it will lead to liquidity crisis and the money will keep piling up with the authorities.

FIEO also pointed out that though the GST council has assured that in case there is a delay in the refunds, the authority will provide interest on the amount at the rate of 6 per cent. The Federation however pointed out that this interest on the amount will start only after the period of 60 days, therefore giving interest on the pending amount is of not much help to the MSME exporters.

FIEO President G.K Gupta in a press interview welcomed the GST, he said that the new taxation policy will prove to be positive for the entire economy.

He however said that the concerns related to the refunds must be taken into consideration.

The Federation has proposed that the interest on the remaining 10 per cent amount must start after 10 days as against to the proposed 60 days.

Last week the Commerce and Industry Minister Nirmala Sitharaman said that the concern has been tabled in front of the GST council and a decision is awaited along the lines.

Sitharaman earlier also acknowledged the fact that delay in remaining amount of the refunds will negatively impact the MSMEs as the small units work on tight budgets, therefore the Ministry has forwarded representation before the GST council in this regard. (KNN/ DA)