GST refund reforms: Experts differ on potential liquidity gains for India Inc
Proposed changes to the goods and services tax (GST) refund mechanism and input tax credit (ITC) framework could ease working capital pressures on Indian businesses, but estimates of the potential liquidity gains vary significantly, depending on the scope of the reforms and the assumptions used.
While Nexdigm estimates that the expanded credit and refund framework could release Rs 50,000 crore to Rs 60,000 crore in annual liquidity once it reaches maturity, Trackase puts the working capital release from faster refunds alone at around Rs 25,000 crore to Rs 30,000 crore.
The proposed reforms seek to accelerate the processing of eligible refund claims and expand the scope of input tax credit available for refunds in specified cases. Exporters, manufacturers and businesses operating under an inverted duty structure could benefit from faster access to funds currently tied up in accumulated tax credits.
