Startups, MSMEs request for timely payments from government and corporates
Parul January 8, 2020
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As per news reports, the micro, small and medium enterprises (MSMEs) have asked the central government to ensure timely payment of their bills and dues from the government departments and large corporates as they take months to clear them. Reports claim that this point was raised in the budget recommendation to the Finance Minister Nirmala Sitharaman.
The letter to the Finance Minister read, “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”.
Reports claim that many government departments and large corporates are delaying the acknowledgment and booking of invoices in their system by several months and then later, ask suppliers to send updated invoices which is disturbing the financial cycles at large.
According to reports, the budget recommendation letter also highlighted 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. In fact, the letter also stated that the refund of the TDS takes a long and they are awaiting the income tax refund for FY 2018-19.
It requested in the letter that all areas within GST where there is a lack of clarity with the field officials are identified and due clarification and information are shared.