In the context of the COVID-19 situation and with a view to provide immediate relief to the business entities and individuals, it has been decided to issue all the pending income-tax refunds up to Rs 5 lakh, immediately, the Finance Ministry said.
This would benefit around 14 lakh taxpayers.
"It has also been decided to issue all pending GST and custom refunds, which would provide benefit to around 1 lakh business entities, including MSME. Thus, the total refund granted will be approximately Rs. 18,000 crore."
The government's announcements come in the wake of the overall slowdown induced by the coronavirus pandemic.
There have been about 150 deaths in India due to COVID-19 pandemic and over 5,000 positive cases.
But even as its own revenues have been pressured, the government has tried to crank up spending in order to help individuals, businesses and state governments to help fight the COVID-19 pandemic and its after-effects.
Today, the Centre released about Rs 14,000 crore owed to states as part of the GST compensation.
In March, the government launched a Rs 2.7 lakh crore stimulus package to help counter the slowdown even as media reports suggested that another package may around the corner.
Tax experts and chartered accountants hailed the move.
"This is a welcome move and will ease the financial situation of taxpayers. Refunds were pending at different stages and this will enable taxpayers, business entities, MSME in sustaining their business operations," said Atul Gupta, President of ICAI.
Abhishek Jain, Tax Partner, EY said: "The specific direction to sanction pending refunds would help provide necessary financial stimulus to businesses specifically the severely impacted ones which have huge committed fixed expense outflows."
Ritesh Kanodia, Partner, Dhruva Advisors pointed out: ”The directions for grant of immediate GST and customs refund is a very positive move considering the liquidity crises arising out of the COVID-19 situation. We have seen that such refunds in the past have been consistently delayed either because of a technical or a procedural nuance which has lead to difficulties specifically by MSME sector and has also led to litigation across India on multiple issues, with no standarisarion on the orders being issued on the points of dispute.
"It appears that only refunds processed finally until now will be released. It is however expected at this stage that the authorities provisionally issue all refund claims filed and technical or procedural issues are taken up as a post facto exercise.”
First Published: IST