(MENAFN- KNN India) New Delhi, Nov 27 (KNN) The government has implemented certain reforms to support micro and small enterprises (MSEs) by addressing the longstanding issue of delayed payments from larger companies.

Pankaj Chaudhary, Minister of State in the Finance Ministry, informed the Lok Sabha on Monday that multiple MSME associations have endorsed recent interventions aimed at ensuring timely financial transactions.

In a strategic move last April, the government inserted a new clause in Section 43B of the Income-tax Act 1961, which introduces stricter regulations for companies dealing with MSEs.

Under the revised provisions, any payment to micro or small enterprises that extends beyond 45 days will only be allowed as a tax deduction upon actual payment.

Additionally, companies whose payments to MSEs exceed the 45-day threshold must submit comprehensive half-yearly returns to the Ministry of Corporate Affairs, detailing the outstanding amounts and reasons for delays.

The Ministry of Micro, Small and Medium Enterprises has further expanded its support framework by mandating that businesses with turnovers exceeding Rs 250 crore and all central public sector enterprises (CPSEs) must utilise the Trade Receivables Discounting System (TReDS) platform.

This initiative, facilitated by the Reserve Bank of India, enables MSMEs to obtain financing through multiple channels, helping to mitigate cash flow challenges.

To strengthen institutional support, Micro & Small Enterprises Facilitation Councils (MSEFCs) have been established across states and union territories.

Currently, 159 such councils have been set up, with multiple councils operating in states including Delhi, Maharashtra, Tamil Nadu, and Uttar Pradesh. These councils are instrumental in addressing delayed payment disputes.

Preliminary data from the Samadhaan portal reveals the scale of the challenge, with 2.13 lakh applications totalling Rs 47,366 crore filed by MSEs. Of these, 43,069 applications involving Rs 7,085 crore have been successfully resolved, indicating ongoing efforts to support the small business ecosystem.

These comprehensive measures demonstrate the government's commitment to protecting the interests of micro and small enterprises, recognising their crucial role in India's economic landscape.

(KNN Bureau)

MENAFN27112024000155011030ID1108930961