𝟜𝟝-𝔻𝔸𝕐 𝕄𝕊𝕄𝔼 ℙ𝔸𝕐𝕄𝔼ℕ𝕋 ℝ𝕌𝕃𝔼 ℂ𝕆𝕄𝔼𝕊 𝕀ℕ𝕋𝕆 𝔼𝔽𝔽𝔼ℂ𝕋 𝕆ℕ 𝔸ℙℝ𝕀𝕃 𝟙: 𝕎ℍ𝔸𝕋 𝕀𝕋 𝕄𝔼𝔸ℕ𝕊 𝔸ℕ𝔻 𝕎ℍ𝔸𝕋 ℂℍ𝔸ℕ𝔾𝔼𝕊. ℂ𝕆𝕄ℙ𝕃𝔼𝕋𝔼 𝔻𝔼𝕋𝔸𝕀𝕃𝕊 ℍ𝔼ℝ𝔼

Income Tax rule that bars businesses from claiming tax deductions for payments beyond 45 days to MSMEs for supply of goods and services will come into effect today (April 1).

𝕎𝕙𝕒𝕥 𝕨𝕚𝕝𝕝 𝕔𝕙𝕒𝕟𝕘𝕖 𝕒𝕤 𝕡𝕖𝕣 𝕥𝕙𝕖 𝕟𝕖𝕨 𝕣𝕦𝕝𝕖 𝕗𝕠𝕣 𝕄𝕊𝕄𝔼𝕤?

As per the rule, if a larger company does not pay an MSME within 45 days in case of written agreements, it cannot deduct that expense from its taxable income.

The rule comes as some industry bodies urged government to postpone implementation while the Federation of Indian Micro and Small & Medium Enterprises (FISME) said that the new rue could be a game-changer for MSMEs as large buyers could cold-shoulder suppliers and buy from those MSMEs that are not registered with Udyam.

𝕎𝕙𝕒𝕥 𝕚𝕟𝕕𝕦𝕤𝕥𝕣𝕪 𝕓𝕠𝕕𝕪 𝕙𝕒𝕤 𝕤𝕒𝕚𝕕 𝕠𝕟 𝕄𝕊𝕄𝔼 𝕣𝕦𝕝𝕖?

FISME said that ”such fears are unfounded” as "replacing dependable suppliers just because a large company does not want to pay them in time is a ridiculous conclusion to draw. In any case, in the worst eventuality, the tax thus paid over such delays can be adjusted the following year when the company pays the supplier. But it does instill discipline in commercial practice.

FISME also said that the rule could be beneficial for MSMEs as, “The provision strengthens MSMEs’ position when negotiating payment terms with larger companies. Timely payments can minimise potential disputes and legal hassles over outstanding dues. It encourages more transparent and accountable business practices in the MSME ecosystem.”