Businessman and MSME sectors were continuously protesting for delay of the refunds which caused the blockage of working capital requirements, liquidity shortage etc.
The MSME sector, which accounts for about 29 per cent of the gross domestic product (GDP), is one of the largest job creators in the country.
In order to provide the relief to the MSME sector, the government on Friday announced that all their pending GST refunds will be paid within 30 days.
Further in future also, all GST refunds of micro, small and medium enterprises (MSMEs) will be paid within 60 days from the date of application.
Other decisions like the decision on recommendations of the U K Sinha Committee regarding ease of credit, marketing, technology and delayed payments to MSMEs will be taken within 30 days.
The government would also consider amendment to the MSME Act to move towards a single definition.
Last November, Prime Minister Narendra Modi had announced loans of up to Rs 1 crore in 59 minutes to GST-registered MSME units which would get two percent rebate in interest on new or incremental loans.