New Delhi, May 13 -- A structural flaw in the Goods and Services Tax (GST) framework is locking up nearly Rs 30 lakh crore in working capital and pushing millions of small businesses into a deepening liquidity crisis, according to public policy think tank Empower India.
The organisation said the problem stems from the Inverted Duty Structure (IDS), a situation where GST on inputs is higher than the tax levied on finished goods, resulting in large amounts of unrefunded Input Tax Credit (ITC) being trapped for months.
Inverted Duty Structure Trapping MSME Working Capital
The issue has become more severe at a time when businesses are already grappling with rising input costs and supply chain disruptions triggered by the ongoing West As...