FICO Demands Automated GST Refunds from Punjab Industry Minister

Ludhiana, November 21, 2025: A delegation of the Federation of Industrial & Commercial Organization (FICO), led by President Gurmeet Singh Kular, met Sanjeev Arora, Minister of Industries and Commerce, Punjab, on Friday. The delegation included Senior Vice President Rajeev Jain, Vice President Baldev Singh Amar, and Mankar Garg, Head of the Plastics Division. FICO submitted a written memorandum highlighting key issues faced by the industry.

Automated GST Refunds:
The delegation expressed serious concern over the long-pending GST refunds. They stated that finished goods such as bicycles, sewing machines, and agricultural implements fall under the 5% GST slab, while raw materials attract 18%. This inverted duty structure results in significant refunds that remain stuck with the government. Since this amount belongs to the industry, delayed refunds create a working capital crisis and force units to overuse bank limits, thereby increasing interest burdens. FICO urged the government to ensure automated release of GST refunds immediately after return filings, emphasizing that the amount is neither a grant nor a subsidy but the industry’s rightful money.

New Investment with Same GST Number:
The delegation pointed out that while the Punjab Government grants fiscal incentives to new units with new GST numbers, OEMs do not permit vendors to take new GST registrations. They demanded that incentives must also be extended to those investing in new units under an existing GST number.

Incentives Under Invest Punjab for ITC Inverted Duty Structure:
FICO explained that companies producing goods like fabrics and garments (5% GST) use raw materials such as yarn, dyes, chemicals, and packaging (18% GST), leading to accumulated ITC. They clarified that GST refunds cannot be treated as incentives. Therefore, incentives should be calculated without deducting refunds arising from the inverted duty structure or export-related refunds.

Stop Fourth-Stage Verification:
Members highlighted that the department currently conducts four stages of purchase verification and issues notices even when suppliers are genuine and transactions valid. FICO urged the government to limit verification to three stages, as buyers cannot be held accountable for transactions beyond their supplier’s suppliers. Streamlining this process, they said, would significantly enhance ease of doing business in Punjab.