The community social media startup also said that most startups and MSMEs are still awaiting the income tax refund for FY 2018-19.

LocalCircles writes to FM seeks timely payments from govt and corporates
Atom Startups Wednesday, January 08, 2020 - 09:48

Micro, Small and Medium Enterprises (MSME) want the government to ensure timely payment of their dues and bills from government departments and large corporates.

In its budget recommendation to the Finance Minister Nirmala Sitharaman, 'LocalCircles', a community social media platform, has told Finance Minister Nirmala Sitharaman that many government departments and big corporates take months to clear the bills, despite the platform raising the issue with the ministry earlier in June last year.

"Since working capital is critical to startups and MSMEs, such payment delays create a big cash flow issue. Since GST becomes payable upon generation of invoice and the invoice stays unpaid for months, it only worsens the cash flow," it said in a letter to the Finance Minister.

It observed that businesses have also reported that many government departments and large corporates are delaying the acknowledgement and booking of invoices in their system by several months and then at a later date, ask suppliers to send updated invoices.

It also requested the government to create a process for government departments and large corporates to disclose the details of all MSME invoices due for over 45 days and said that a mechanism should be created to penalise them for non-payment of MSME dues in the stipulated time period.

Further, the letter also mentioned that many startups and MSMEs have reported that the refund of the TDS (tax deducted at source) takes a long time and almost all startups and MSMEs are awaiting the income tax refund for FY 2018-19. It is requested that the government processes TDS refunds within 45 days for past due refunds and any future refunds.

"When it comes to GST refunds, many officers are not processing refunds where there is a lack of clarity on the issue. For example, many companies have reported an issue of offsetting the GST Input Tax Credit (for services) charged by their suppliers against the product sales Input Tax Credit that they collect," said the letter signed by Sachin Taparia, Chairman of LocalCircles.

It requested that all areas within GST where there is lack of clarity with the field officials are identified and due clarification and information is shared, so that GST decisions by officials are expedited.

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