CAIT, in its representation to the Finance Ministry, has urged for a postponement of the new rule mandating timely payment to MSMEs within 45 days, citing the need for clarity and awareness among traders. Secretary General Praveen Khandelwal emphasized the necessity of postponing the implementation by a year or until sufficient clarity is achieved, allowing traders ample time to comprehend and adhere to the law seamlessly.
The trade body proposed a postponement of the law’s implementation from April 1, 2024, to April 1, 2025, providing a one-year deferral period. CAIT conveyed its concerns to Finance Minister Nirmala Sitharaman during a meeting held on February 14.
The provision, outlined in Income Tax Law 43B (h) within the Finance Act 2023, mandates companies to make payments to the MSME sector within 45 days to ensure timely payments and maintain uninterrupted cash flow. Failure to comply would result in the amount being added to their profits, subject to income tax. Due to ambiguity surrounding the law’s applicability to traders and related provisions, CAIT advocated for suspending its implementation until nationwide clarification and dissemination of information are achieved.
MSMEs grapple with challenges arising from delayed payments from both public and private entities, impacting their operational capabilities and cash flow. The amendment seeks to address these challenges, aiming to alleviate the burden on small businesses. Initiatives like the TReDS platform and the MSME Samadhaan portal are implemented to facilitate faster invoice discounting and expedite the resolution of delayed payment disputes, thereby improving liquidity for MSMEs.
