The government would probably change Section 43B of the Income Tax Act to introduce Clause (h) in order to solve the problem of MSMEs receiving late payments from their buyers. The clause prohibits buyers from deducting expenses from invoices from micro and small businesses (MSEs) unless they are paid within 45 days in the event of an agreement or within 15 days in the absence of one. It will come into effect on April 1, 2024.
"Industry Urges Government for Extended Payment Periods"
“A source with knowledge of the matter told FE Aspire that the government is examining the request to determine the extent of the amendment to the clause so that the credit cycle of MSMEs is not disrupted and those who are unaware of the change have enough time to avoid any probability of liabilities.”
For this story, emails to the Finance Ministry were not immediately answered.
The industry association for clothing manufacturers, the Clothing Manufacturers Association of India (CMAI), urged the government earlier this month to extend the maximum period of time for receiving payments from buyers to 90 days by March 31, 2025, and 60 days by March 31, 2026, before cutting it to 45 days by March 31, 2027.
