Quick Summary
A delegation from the Federation of Industrial Commercial Organisation (FICO) met Punjab Industries Minister Sanjeev Arora and submitted a memorandum seeking automated and timely GST refunds, citing severe working capital stress across key manufacturing sectors. According to the industrialists, the government has been delaying GST refunds arising from the inverted duty structure, where raw materials attract 18% GST, while finished goods such as bicycles, sewing machines and agricultural implem
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FAQ :
Working capital stress is primarily caused by delays in GST refunds, especially those arising from the inverted duty structure where GST on raw materials is higher than on finished goods.
The Federation of Industrial & Commercial Organisation (FICO) is advocating for automated and timely GST refunds.
The inverted duty structure refers to a situation where the GST rate on raw materials (e.g., 18%) is higher than the GST rate on finished goods (e.g., 5%), leading to substantial refund claims.
Delayed refunds lead to cash flow problems, forcing businesses to overuse bank credit limits and incur higher interest costs, thus tightening their finances.
FICO has proposed trimming the current four-stage purchase verification process to three stages to enhance the ease of doing business and reduce inconvenience for legitimate businesses.
The Punjab Industries Minister, Sanjeev Arora, assured the FICO delegation that their concerns would be reviewed with the relevant GST officials.
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