The micro, small and medium enterprises (MSME) sector has hailed Centre's move to quicken refunds of GST claims but expect more measures to cut down processing time.

They have demanded more action at state-level to clear pending refunds and reduce paper work which continues to be a painful exercise.

"Most small firms are under the jurisdiction of state tax officials who process their refunds for both CGST and SGST. Not much action has been so far seen in states. On its part, the Centre has expedited the process but we have not seen the same speed at state level," said Animesh Saxena, President of Federation of Indian Micro Small & Medium Enterprises (FISME).

As part of measures to boost economy and lift business sentiment, Finanace Minister Nirmala Sitharaman had on August 23 said that all the pending GST refunds that are due to MSMEs till now will be executed within the period of 30 days. Fresh claims of refunds will be settled in 60 days in order to ensure working capital is not blocked.

Smaller firms and traders with annual turnover below Rs 1.5 crore are under the administrative control of state tax department and the remaining 10 per cent with the Centre. The large taxpayers with annual turnover above Rs 1.5 crore turnover is divided equally in the ratio of 50 per cent each for the central and the state tax administration. As on July, 2019 there were 1.22 crore businesses registered with Goods and Services Tax Network (GSTN).

Bharat Garg, Managing Director, JK Metal Industries and also former president of Haryana Chamber of Commerce and Industry said that refunds are processed in 30 days even now once the papers are filed online as required by the Tax Department. But the problem lies in collating and matching of all the documents.

"The procedure to get refunds from the government is still painful. There is so much harassment. All the documents are now filed online but still we are required to give hard copy. It takes a lot of labour and time to get all the papers together. If I talk about my business, I haven't got refunds for the last 13 months. If my funds are tied up with government it means crores and crores of rupees. Funds of so many MSMEs are tied up. This is another reason why there is slowdown," he said.

Small businesses which have been severely impacted by the double blow of demonetisation and GST are facing severe liquidity crunch. Any delay in the refunds of their claims worsen their working capital position. They have, therefore, demanded speedy refunds.

"Government is talking about digital India and transformation. If it is so then why can't the refunds be cleared in 10 days," said Chandrakant Salunkhe, founder and president of SME Chamber of India.