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Small units to lose businesses as govt tightens input tax credit rules

Small units to lose businesses as govt tightens input tax credit rules

Come January 1, businesses could find their working capital and profitability taking a hit if any of their suppliers fail to upload their invoices on the goods and services tax (GST) portal, as the government has tightened the norms on input tax credits (ITC) to check frauds. By doing away with the provisional ITC, the authorities have also made it difficult for small businesses to get supply orders from Corporate India, which will now deal with only businesses above a certain size that can meet the compliance requirements under the GST regime. Currently, businesses can claim 5% of their total eligible ITC as ‘provisional’ ITC even if these are not matched with supplier invoices.

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