A new regulation for the assessment year 2024-25 has been enforced by the central government, mandating that purchasers settle payments for goods procured from MSMEs within 45 days of delivery.
Furthermore, all outstanding dues to MSMEs must be cleared before March 31, 2024. Failure to adhere to these timelines will result in the pending payment being treated as income, subject to taxation.
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- The Kerala Textile and Garments Dealers Welfare Association (KTGDA) has urged MSEs operating in the textile industry to alter their MSME classification from “manufacturing” to “trading” immediately. The reason behind this request is the implementation of a new clause in the Income Tax Act, which mandates businesses to make payments to their suppliers within 45 days, under section 43B(h).
While the government aims to safeguard the Ministry of Micro, Small, and Medium Enterprises (MSMEs), this initiative has introduced uncertainty in the market, leading to the cancellation of orders in Ahmedabad’s textile markets.
The impact is also felt among chemical traders, with some buyers opting to postpone their purchases until after February 16 to ensure that their payment deadlines extend beyond March 31. The textile value chain, accustomed to a credit period of up to 120 days, is particularly affected by this rule.
Gaurang Bhagat, the president of Maskati Cloth Market Mahajan, stated, “We plan to convene a meeting of all associations to address the challenges arising from this regulation. Numerous order cancellations are currently being observed.”
Bharat Chhajer, the former chairman of the Powerloom Development and Export Promotion Council (PDEXCIL), commented, “Although the intention behind the move is to assist MSME units, the immediate response is quite different. In the textile industry, where the standard credit period is 120 days, adhering to a 45-day payment window for MSMEs is challenging and impractical.
Many traders have already cancelled recent orders, and several have refrained from purchasing goods from MSME manufacturers until at least Feb 16, ensuring that their payments fall due in the next financial year. These matters require clarification.”
Karim Lakhani, a chartered accountant, remarked, “New acquisitions have declined since the introduction of the rule. Customers are now turning to larger and medium-sized units. Given that many businesses operate on credit periods of up to 120 days, numerous enterprises have cancelled orders.”
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Nilesh Damani, secretary of the Gujarat Dyestuffs Manufacturers’ Association (GDMA), mentioned, “In the chemical industry, the typical credit period is around 60 days, but due to low demand, this period is often extended. With the implementation of the new rule, many buyers are inquiring whether sellers are registered as MSMEs or not.”
Where is MSME Samadhan Portal.to lodge complaints against delay payments and non payment of parties.
You are requested to kindly visit on “https://samadhaan.msme.gov.in/MyMsme/MSEFC/COM_MSEFC_EntLogin.aspx” link to lodge complaints against delay payments and non payment of parties.
It’s not good rules. It’s should be change for 90 to 120 day
this rule is not acceptable at all it is difficult to clear payments within 45 days such rules will again lead to slow down the market lot of pending orders are getting cancelled retailers are sending gr
Due to Online business, Note Demonitisation, VAT to GST conversion, Covid , Growing expenses but business distribution due to huge competition in Textile Industry everybody are facing terrible difficulties. So in such times this rule will lead to very high risk for Medium and Small scale business.So extending for 120 to 150 days will be adviseable especially in Textile field.
yes you are right sir already because several other factors like online business retailers across India are facing challenges so in the present scenario it is impossible to do business with such stupid rules
pagalpan hai in this case only large scale investors will survive. think about the midline stream of traders they can not survive .it should be 120days plus days should be given