Ministry Receives 'Positive' Feedback On 45-Day MSME Payments Rule
Date
6/19/2024 2:19:32 PM
(MENAFN- KNN India)
New Delhi, Jun 19 (KNN) The Ministry of Micro, Small and Medium Enterprises (MSME) has received "positive" feedback from industry regarding the new 45-day payments cycle rule for MSMEs, according to a senior government official.
The rule, introduced in the Finance Act 2023, requires companies to pay outstanding dues to micro and small enterprises within 45 days for product supplies where an agreement exists, and within 15 days without an agreement.
Failure to adhere to these timelines will mean the buyer cannot claim tax deductions for such payments.
While some MSMEs had raised concerns that large firms may avoid procuring from small suppliers due to the penalties involved, the official said the ministry has received an encouraging response so far.
"We have received positive feedback from industry on implementing the 45-day payments rule. They are very happy," the official stated, adding that any changes to the provision would be the finance ministry's prerogative, reported BS.
The new rule aims to address prolonged payment delays faced by MSMEs which adversely impact their working capital and business growth. \
However, Sumit Singhania of Deloitte India noted some implementation issues like determining MSME eligibility, performance-linked retentions and year-end accruals that still need resolution.
MSME representatives welcomed the move, stating it will foster financial discipline among buyers and prevent disastrous impacts of delayed payments on small businesses.
(KNN Bureau)
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