Government May Ease MSME Payment Rules in Upcoming Budget

The government may relax the rule requiring payments to MSMEs within 45 days to prevent large corporations from sourcing elsewhere. This change, under consideration for the upcoming Budget on July 23, aims to address concerns over Section 43B(h) of the Income Tax Act. MSMEs fear losing clients due to this provision.

The government may soon relax the requirement for making payments to MSMEs within 45 days of purchasing goods and services. This move aims to prevent large corporations from turning to alternative suppliers, sources revealed.

An announcement is expected in the Budget likely to be presented on July 23. The government is currently reviewing suggestions by MSMEs for amendments to Section 43B(h) of the Income Tax Act.

Last year's Budget introduced a clause under Section 43B to address delayed payments to MSMEs. However, MSMEs now fear losing business to non-MSME suppliers due to this provision.

The Finance Minister indicated any changes would be addressed in the upcoming full Budget in July, based on MSME representations. The MSME sector significantly contributes to the economy, making up 30% of GDP and accounting for 45.56% of total exports.

(With inputs from agencies.)