In the Lok Sabha, Pankaj Chaudhary, Minister of State for Finance, cited that the amended Section 43B of the Income-tax Act, 1961, introduced in the Union Budget last year, was endorsed via MSME associations in India.
The amendment has the motive to address the problem of late payments faced via micro and small enterprises (MSEs), which frequently put at risk their cash flow and business sustainability.
It was marked by Pankaj Chaudhary that Clause (h) was added to Section 43B in April 2023. The same clause obligates that any left payment exceeding 45 days to MSEs shall merely be tax-deductible on the actual payment. Prompt payments by buyers have been incentivized through the same provisions and assist in lessening the financial strain on small businesses.
The companies are needed to provide the half-yearly returns to the Ministry of Corporate Affairs, which are sourcing goods or services from MSEs and delaying payments exceeding 45 days, detailing the dues and cause for delays.
Also, the government has extended the obligatory onboarding to the TReDS platform, operated by the Reserve Bank of India (RBI), for businesses with a turnover surpassing Rs 250 crore (down from ₹500 crore) and all Central Public Sector Enterprises (CPSEs). Discounting of trade receivables has been streamlined under TReDS proposing MSEs faster access to funds via diverse financiers.
Read Also: Understanding the Critical Role of MSMEs in India’s Economy
Under the MSMED Act, 2006 the Micro and Small Enterprises Facilitation Councils (MSEFCs), have made another significant process to address the late payment grievances. To date, 159 MSEFCs have been designated all over states with diverse councils functional in regions such as Maharashtra, Tamil Nadu, and Uttar Pradesh.
As per the Samadhaan portal, which monitors the late payment cases, 43,069 applications involving ₹7,085 crore have been fixed out of 2.13 lakh cases, involving a total of ₹47,366 crore.
The same measures specify the commitment of the government to ensure the financial stability of Micro, Small, and Medium Enterprises (MSMEs), an important sector for India’s economic growth.
The experts from the industry assume that such measures on execution will foster an effective business ecosystem and rectify compliance among large companies.
The same legislative push specifies the bold stance of the government on safeguarding the MSEs and ensuring a significant inclusive economic environment.
