New Delhi, The government may relax the requirement of making payments to MSMEs within 45 days of purchasing goods and services to prevent large companies from seeking other avenues of supply, sources said.
The announcement in this regard could be made in the Budget which is likely to be presented on July 23.
The government is considering suggestions on changes to Section 43B(h) of the Income Tax Act made by MSMEs during pre-budget consultations, sources said.
In last year's Budget, the government added a new clause in Section 43B of the Income Tax Act to address the challenge of late payments faced by MSMEs in the country.
According to section 43B(h) of the Income Tax Act, introduced by the Finance Act, 2023, if a larger company fails to pay an MSME on time (within 45 days in case of written agreements) it will not You can deduct that expense from your taxable income, which would lead to potentially higher taxes.
MSMEs fear that due to this provision, large buyers may ignore MSME suppliers and start purchasing from those MSMEs that are not registered with Udyam or from people who are not MSMEs.
The amendment was introduced so that MSMEs would get timely payments, but they expressed a lot of fear, sources said, adding that they feared that large corporations, in a bid to safeguard their interests, may shift their sourcing requirements to larger companies. or ask their suppliers to abandon their MSME registration to do business with them.
Earlier in May, Finance Minister Nirmala Sitharaman had said that changes, if any, to the rule will have to be made in the full July budget under the new government, according to representations submitted by MSMEs.
The MSME sector accounts for 30 percent of the country's gross domestic product (GDP) and the second largest employer after agriculture. The share of exports of specified products for MSMEs constituted 45.56 percent of the country's total exports.
The announcement in this regard could be made in the Budget which is likely to be presented on July 23.
The government is considering suggestions on changes to Section 43B(h) of the Income Tax Act made by MSMEs during pre-budget consultations, sources said.
In last year's Budget, the government added a new clause in Section 43B of the Income Tax Act to address the challenge of late payments faced by MSMEs in the country.
According to section 43B(h) of the Income Tax Act, introduced by the Finance Act, 2023, if a larger company fails to pay an MSME on time (within 45 days in case of written agreements) it will not You can deduct that expense from your taxable income, which would lead to potentially higher taxes.
MSMEs fear that due to this provision, large buyers may ignore MSME suppliers and start purchasing from those MSMEs that are not registered with Udyam or from people who are not MSMEs.
The amendment was introduced so that MSMEs would get timely payments, but they expressed a lot of fear, sources said, adding that they feared that large corporations, in a bid to safeguard their interests, may shift their sourcing requirements to larger companies. or ask their suppliers to abandon their MSME registration to do business with them.
Earlier in May, Finance Minister Nirmala Sitharaman had said that changes, if any, to the rule will have to be made in the full July budget under the new government, according to representations submitted by MSMEs.
The MSME sector accounts for 30 percent of the country's gross domestic product (GDP) and the second largest employer after agriculture. The share of exports of specified products for MSMEs constituted 45.56 percent of the country's total exports.
