MSME 45-day payment rule: CAIT urges Finance Minister to postpone implementation
CAIT appealed to the government to postpone the implementation of the rule from April 1, 2024, to April 1, 2025, to provide traders with a one-year deferral period.
The Confederation of All India Traders (CAIT) met with Finance Minister Nirmala Sitharaman urging her to postpone the implementation of the 45-day payment rule for MSMEs and address concerns related to Income Tax Law 43(B)H.
Praveen Khandelwal, Secretary-General, CAIT, acknowledged the government's step in introducing this provision in the Income Tax Act, which tackles the delayed payments issue among the micro and small enterprise traders within 45 days to maintain a seamless cash flow.
However, he stressed the necessity for increased awareness among traders regarding this provision and suggested a one-year postponement of its implementation. Presenting the solution during the meeting, Khandelwal said the delay would give traders sufficient time to comprehend and comply with the law more effectively.
CAIT appealed to the government to postpone the implementation of this rule from April 1, 2024, to April 1, 2025, to provide traders with a one-year deferral period.
Both CAIT National President B C Bhartia and Khandelwal also emphasised the need to clarify ambiguous provisions and enhance awareness among MSME traders through collaborative efforts involving the Income Tax Department, the Ministry of MSMEs, and trade organisations.
In the Budget 2023 announcement, the Finance Minister unveiled a measure, which would commence from April 1, 2024, stating the government would authorise income tax expense deductions for buyers only when payments are made to suppliers, specifically MSEs. The announcement specified that MSEs should receive payments within 45 days with an agreement and/or within 15 days without an agreement.
As the implementation date approaches, the rule's enforcement has sparked turmoil within the sector, resulting in buyers cancelling their orders. MSMEs are apprehensive that the development could potentially lead to business losses.
Edited by Suman Singh
