Traders’ body Federation of All India Vyapar Mandal (FAIVM) will urge the new NDA government to extend the time period for payment to MSMEs from their buyers to up to 180 days from the current 45 days. Talking to FE Aspire, FAIVM President Jayendra Tanna said the changes made to Section 43B of the Income Tax Act pertaining to delayed payments’ crisis for MSMEs are expected to be repealed in the full budget in July as hinted by Finance Minister Nirmala Sitharaman in Narendra Modi-led government’s second five-year term.
“The new government should have a uniform policy on payments to suppliers of goods and services within 180 days from the date of invoice issuance instead of the current 45 days,” said Tanna.
Currently, traders including wholesale and retail traders are limited to raising bank credit under priority sector lending norms and hence there is no mandate for their buyers to pay them in 45 days and be eligible for tax benefits.
As a result, Tanna said the new government should extend benefits of MSME registration including delayed payment mandate to traders also having Udyam registration from the MSME Ministry.
“The revised payment policy will also be able to address the provisions of GST (Goods and Services Tax) regulations,” said Tanna.
Importantly, talking to MSMEs and local industries in Ludhiana in May, Sitharaman had said that the government will repeal the changes, in the full budget, made to Section 43B of the Income Tax Act if MSMEs want to continue operating with uncertainty on payment timelines from their buyers.
“If MSMEs want relaxation in payment made by their buyers without the 45-day limit, whether over 45 days, 150 days or a year and further, then it is easy to make the changes. We will change it and go back to the original rule,” Sitharaman had said.
The Supreme Court on May 06 had rejected a plea by FAIVM along with the Madras Merchants and Manufacturers Association, and the Confederation of West Bengal Trade Associations that sought an interim stay on the new provision in the Income Tax Act or quashing it.
The government had brought in a new clause (h) on April 1, 2024, to allow expenses to MSME buyers only if paid within 45 days in the year of actual payment instead of the year when it was incurred as an expense.
President Droupadi Murmu on Friday invited Narendra Modi to form a government at the Centre. Modi is scheduled to be sworn in as India’s Prime Minister at 6 PM on June 9.
