Lot of money in service tax refunds is stuck, hurting the cash flow of companies. But, the issue won't be there any longer as the government is going to expedite refunds.

The government wants to start afresh for goods and services tax.

For this, the apex indirect taxes body, Central Board of Excise and Customs, is also working on an overhaul of the refund mechanism for the BPO, IT and ITES sectors.

Reportedly, indirect tax collections shot up 35.8% to Rs 3.24 lakh crore in the first six months of the current financial year.

This is over 50% of the budgeted estimate as the government expected Rs 6.47 lakh crore collections from indirect taxes in 2015-16.

When Narendra Modi-led government stormed into power, it had promised a stable tax regime and keeping back refunds was against that spirit.

The service tax refunds that are stuck are hurting the cash flow of companies.

Exporters can claim refunds on duties paid on imported inputs used to manufacture goods.

"Very encouraging move...This would aid liquidity for exporters and thereby their business," said Ajay Sahai, Director General and CEO of the Federation of Indian Export Organisations.