Amid industry concerns, the Finance Ministry is contemplating delaying the 45-day payment rule for MSMEs until April 20The proposed amendment to Rule 43B (h) under the Income Tax Act has sparked debate among SME groups and industry bodies, with calls for adjustments to avoid disruptions in payment cycles and order cancellations. Stay tuned as the Ministry evaluates feedback and addresses the implications for MSMEs and tax compliance.
Hey everyone, I have some interesting news to share with you today. The Finance Ministry is considering pushing back the implementation of the 45-day payment rule for MSMEs until April 2025.
Just to give you some background, this rule was introduced in the Finance Act of 2023, and it basically requires payments to MSMEs to be made within 45 days to avoid taxation. However, industry bodies have voiced their concerns about this shorter payment cycle potentially disrupting traditional practices and even leading to order cancellations.
The Ministry of MSME has taken notice of these concerns and has asked for feedback from SME groups by February 19. In response to industry representations and proposals for adjustments to the act, the decision to delay the enforcement of Rule 43B (h) under the Income Tax Act is being considered.
The Finance Ministry is now looking into a new rule that would modify income tax payments to MSMEs within 45 days, starting from April 1. Industry demands include a request for a deferment or an extension of the deadline for compliance.
Clause (h) in section 43B of the Income Tax Act currently requires timely payments to MSMEs, with tax implications for any delays. The government is open to amending this clause in response to the requests from the industry.
CAIT has suggested postponing the implementation of the rule for one year to allow for greater awareness and compliance. MSMEs, especially in the textile industry, are expressing their concerns about how this rule could impact supplier-buyer relations and their preparedness for this provision.
TASMA, on the other hand, is urging the MSME ministry to amend the clause to allow 90 days for payment settlements, instead of the original 45-day requirement.
It’s worth noting that there have been a significant number of applications filed against buyers for delayed payments, totaling a whopping Rs 41,105 crore, with only a small fraction of these cases being resolved by MSE Facilitation Councils.
This is definitely a hot topic in the business world right now, and it will be interesting to see how the government and industry stakeholders navigate these concerns and come to a resolution. Stay tuned for more updates on this developing story!
