BENGALURU: The Centre is looking into improving GST compliance by tackling technology issues and rationalizing tax rates, but the greater problem of working capital of businesses getting locked up remains unaddressed.With an estimated Rs 2 lakh crore stuck with the government due to procedural shortcomings in the new taxation regime, experts said it may lead to bigger problems if not addressed urgently.“Close to Rs 2 lakh crore has been blocked since GST was launched in July. It is an unprecedented situation where a huge amount of money belonging to businesses being held up with the government,” said Praveen Khandelwal, member of advisory group of law committee at GST Council .“With no working capital in hand, traders are struggling to run their businesses. Many have shut shop. If greater damage is to be avoided, this has to rectified urgently. Else, it will be too late,” said Khandelawal, who is also secretary general of Confederation of All-India Traders (CAIT).He said the GST Council will deliberate the issue when it meets on November 9 in Guwahati.Trade bodies say the main reason for the working capital getting blocked is the lack of clarity on refunding excess tax paid. In the earlier value added tax (VAT) regime, traders would get back the excess tax paid in their bank accounts immediately. But under GST, excess input tax paid will not be refunded and can only be carried forward for the next transaction. This means, a trader would have to wait for the next transaction to avail input tax credit and has to pump in extra capital for the continuity of his/her business.For instance, DPK Engineers Pvt Limited , a Bengaluru-based company that manufactures diesel generator sets, pays 28% GST on all its input material. When selling its product, the company collects the stipulated 18% GST. The company, however, is not entitled to get a refund of the 10 % excess tax it has paid as the GST law says tax payers can only carry forward the excess input tax.Even to carry forward the excess input tax paid, the trader has to wait for the government to verify transactions of both the seller and purchaser. Traders say the government’s failure to do this since July is one of the main reasons for money getting stuck.“We have been losing Rs 25 lakh a month on an average after July. Being a medium-scale enterprise, we can’t afford to pump in capital given that our money to the tune Rs 1 crore is stuck with the government,” said S Sampathraman, chairman and managing director of DPK Engineers Pvt Ltd and former president of FKCCI.Commercial tax officials said the government is working on easier procedure where traders can get input tax credit without any delay. “We have started issuing input tax credit forms. I expect the situation to improve by this monthend,” said K S Basavaraju, joint commissioner (e-audit) commercial taxes.Another blow that GST has dealt to businesses is the levy of 18 % on the movement of stocks, on which there was no tax in the earlier VAT regime.“If they want us to pay tax for transferring goods from our factory to the warehouse, then our business becomes unviable. We have closed four godowns across India. We have chosen not to keep an inventory,” said T Praveen Kumar, general manager (marketing and sales) at Rotomotive Powerdrives India Ltd that manufactures induction motors.