(MENAFN- KNN India) Bengaluru, Jan 30 (KNN) The South India Garment Association (SIGA) has raised an alarm over a recent payment rule affecting Micro, Small, and Medium Enterprises (MSMEs), asserting its potential harm to the garment industry's growth.
In an official letter addressed to Prime Minister Narendra Modi, SIGA urged the repeal of Rule 43B(H) in the Income Tax Act, which significantly affects numerous garment units nationwide, reported Bangalore Mirror.
Under Section 43B(h) of the Income Tax Act, any sum payable to a micro or small enterprise, exceeding the time limit specified in Section 15 of the MSMEs Development Act, 2006, is allowed only in the previous year when the payment is made.
This clause mandates payments to micro and small manufacturers and traders within 15 to 45 days for goods purchased from them before March 31, 2024. Failure to adhere to this timeline results in pending payments being deemed as taxable income.
SIGA expresses concern that the implementation of this rule will adversely affect many garment factories, as industry norms typically involve payments after a 90-day period.
SIGA President Anurag Singhla emphasises the potential blow to an industry already grappling with challenges from corporate competition and appeals to the Prime Minister for the rule's repeal in the interest of preserving jobs.
Despite the government's intention to protect MSMEs, garment factories are facing cancellations from clients, leading to what SIGA Vice President Naresh Lakhanpal describes as the industry's worst crisis in 50 years.
BC Shivakumar, Managing Director of BS Channabasappa & Sons, acknowledges the good intention behind the rule but highlights its adverse effects on the garment industry, requesting a phased implementation to mitigate its impact.
Former SIGA President Kundan Jain appeals to the government not to enforce the new rule, expressing concerns over order cancellations from retailers.
He emphasises the industry norm of making payments within 75 to 90 days and anticipates challenges in meeting a 45-day payment requirement.
(KNN Bureau)
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