Liquidity boost: Government considers tax refunds to large firms

The government is likely to provide income tax and GST refunds to large companies.

The government is likely to provide income tax and GST refunds to large companies, to ensure additional liquidity during the Covid-19 crisis induced lockdown. Government officials said the amount is expected to be much higher than the Rs 18,000 crore in refunds being issued to small taxpayers currently.

“Large cases (of refunds) will be dealt with after a week or 10 days, by which we will have issued refunds to small taxpayers,” said one official. He added that although about 93% of all refund cases were of small taxpayers, the outgo is small, but in case of large companies it will be higher.

“We are trying to process them as soon as possible, which will also provide some liquidity to industry,” the official added.

The government said on April 8 that it will issue Rs 18,000 crore in refunds of up to Rs 5 lakh each to taxpayers to ease the funding crunch being faced by many taxpayers.

The Central Board of Direct Taxes (CBDT) has issued refunds worth Rs 4,250 crore to about 1.02 million taxpayers within a week of the announcement.

An equal amount will be issued shortly, taking the total amount to Rs 8,000- Rs 8,500 crore.

The government has also expedited refunds under the goods and services tax (GST) and customs, with priority given to micro, small and medium enterprises that have been hit the hardest due to the lockdown.

Industry had sought early issuance of refunds even if in excess of Rs 5 lakh since they need immediate funds in view of the lockdown being extended to May 3.

Source- Economic Times.