Aligning GST payments with actual cash inflows could unlock liquidity trapped in India’s long receivable cycles. By easing the monthly tax burden on unrealized income, a shift to quarterly payments would release working capital, strengthen small firms and fix a distortion.
Aligning GST payments with actual cash inflows could unlock liquidity trapped in India's long receivable cycles. By easing the monthly tax burden on unrealized income, a shift to quarterly payments would release working capital, strengthen small firms and fix a distortion.
India's goods and services tax (GST) framework has a structural timing asymmetry that disproportionately burdens micro and small enterprises. While tax liability is triggered at the point of invoicing, cash realization for many entities occurs months later. In an economy where extended credit terms are routinely imposed by larger clients, this design choice compels smaller firms to remit tax on income that remains unrealized, effectively transferring working capital from the weakest balance sheets to the strongest.