In future, all GST refunds of MSMEs will be paid within 60 days from the date of application, said FM Nirmala Sitharaman.
New Delhi: In a major relief to the MSME sector facing liquidity shortage, the government on Friday announced that all their pending GST refunds will be paid within 30 days.
Also, in future, all GST refunds of micro, small and medium enterprises (MSMEs) will be paid within 60 days from the date of application, Finance Minister Nirmala Sitharaman said while announcing a slew of measures to boost growth.
Reacting to the announcement, MSME Minister Nitin Gadkari said clearing GST dues within 30 days will be highly beneficial for the MSME sector and will also be instrumental in increasing job opportunities.
The amount of pending GST refunds owed to MSMEs is 'significant', he told reporters here.
A top government official said the average amount of GST refund related dues at any given point in time is around Rs 7,000 crore. However, he did not share the exact amount of pending GST refunds for MSMEs.
"I would like to thank Nirmala Sitharaman. The measures taken by her will be quite beneficial for the MSME sector," Gadkari said.
In a tweet, he welcomed the decisions taken by the Finance Minister and said "this will boost the MSME sector and will be instrumental in increasing job opportunities".
The government would also consider amending the MSME Act to move towards a single definition.
Gadkari said this was under "serious consideration" and a decision will be taken in the next 10-15 days.
Speaking earlier at a press conference to announce measures to boost growth, Sitharaman said the decision on recommendations of the U K Sinha Committee regarding ease of credit, marketing, technology and delayed payments to MSMEs will be taken within 30 days.
She further said that to take advantage of liquidity with the public sector banks (PSBs) and last mile customer connect of NBFCs, the state-run lenders will fast track collaboration for loans to MSMEs.
The MSME sector, which accounts for about 29 per cent of the gross domestic product (GDP), is one of the largest job creators in the country.