MSME Ministry's 45day payment rule receives 'positive response'

The Ministry of Micro, Small and Medium enterprises (MSME) have received positive response from the industry for the '45 days payment cycle'. This statement assumed importance as MSME s expressed concerns about how it would affect their business as big companies would prefer buying from unregistered enterprises. 

Additionally, failure to comply with the given timeline would attract penalties, and the payment made to the MSME s was not tax deductible.

Any changes in the upcoming budget would be entirely in the control of the Finance Ministry according to one of the senior officials. 

In order to tackle the issue of delayed payments faced by MSME s, Clause(h) under Section 43 b was introduced by the Government, which stated that buyers can claim expenses incurred towards MSME s only if paid within 45 days in case an agreement exists and within 15 days in case of no agreement. 

A survey conducted by India SME Forum (not-for profit organisation for MSME s) showed that out of the total 102 MSME s, 93 of them supported the rule while 5 of them suggested changes and 4 of them favoured in removing the tax amendment. 

It has taken almost two decades for trying to get buyers follow the 45 days’ time limit and this provision in the IT Act will act as a boon for the MSME s.