Government News
The Union Budget 2024 may see the government loosen the 45-day payment restriction for MSMEs.
By Kajal Agarwal - 09 Jul 2024 06:19 PM
According to insiders, the government may decide to loosen the rule requiring MSMEs to be paid for goods and services within 45 days of the purchase in order to deter big corporations from exploring alternative sources of funding This could be announced in the budget, which is expected to be delivered on July 23.Overview. The government is thinking about easing the 45-day payment deadline for MSMEs in an effort to keep big businesses from looking for alternative suppliers. It is possible that this modification to Section 43B(h) of the Income Tax Act would be disclosed in the forthcoming July 23 Budget.
As per the Finance Act 2023's introduction of Section 43B(h) of the Income Tax Act, a larger company may face greater taxes if it fails to pay an MSME within the stipulated timeframe of 45 days for written agreements. This is because the firm cannot deduct the payment from its taxable income.The amendment was introduced to allow MSMEs to receive payments on time, but many of them expressed fear, according to sources. They said they were afraid that large corporations might ask their vendors to give up their MSME registration in order to do business with them, or they might shift their sourcing requirements to larger firms in an effort to protect their interests.