SOMETIMES THE MOST helpful of things can have an unintentional fallout. Take the 45-day payment rule for MSMEs for instance. With preparation underway for the Union Budget 2024-25, finance ministry officials are trying to understand the unintended impact of the new provision under the Income Tax Act that mandates payments to micro, small and medium enterprises (MSMEs) within a 45-day time period. According to sources, some relief may be on the cards to ensure that payments are not tied up to the 45-day window.
THE INCOME TAX CHALLENGE
1 The Finance Act 2023 inserted a clause in the Income Tax Act to ensure payments within 45 days to MSMEs
2 In case of nonpayment within 45 days, buyer will have to pay tax on the amount
3 The MSME sector has sought deferment and extension of deadline to 60 or 120 days
4 Many MSMEs have faced cancellation of orders since the rule came into effect
Finance Minister Nirmala Sitharaman had-at an interaction with MSMEs in Ludhiana on May 29-said that if MSMEs do not want the 45-day payment rule, then the Centre is willing to reconsider it.
The genesis of the issue lies in the Finance Act 2023, which inserted a new clause (h) in section 43B of the Income Tax Act, under which larger enterprises must pay MSMEs within 45 days of a written agreement. Failure to do so prevents these large businesses from deducting the expense from their taxable income, potentially resulting in higher taxes. This stringent timeline has caused a significant fallout, with many small business owners cancelling their MSME registrations. The critical question now is whether this policy shift genuinely supports the underserved sector or inadvertently drives business toward larger enterprises.
Denne historien er fra July 21, 2024-utgaven av Business Today India.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra July 21, 2024-utgaven av Business Today India.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
The EV Craze
The country’s growing luxury car market is seeing a shift with environmentally-conscious consumers betting on electric vehicles as a sustainable travel option. Though just 6%, the share of EVs in the luxury segment is rising rapidly
The Storage Boom
Data centres are being built at a frenetic pace in india as companies scramble to meet the ballooning demand from mobile phone users and firms adopting al. Can the country’s energy infrastructure keep up?
India Beckons
Owing to rising incomes in India and overall wealth expansion, luxury brands are wooing the country like never before
The Pearls of The Sea
Caviar, that rare food, is considered the epitome of fine dining. Here is everything that you need to know about it
66.Brand persona should define the core"
I’d say this was a strategic pivot. We had an iconic brand, but had, over time, evolved into diversified lines of businesses that could no longer be represented within the confines of our ‘name’.
Unwind in Style
Here is acomprehensive list of top tech picks that help you unwind by blending perfection in performance with luxury
A Lifelong Affair with Inspiration
In my art journey, the diversity of my acquisitions mirrored the expanding horizons of my understanding of art
Make it Bubbly
Champagne is much more than just a symbol of celebration and success. Know about its nuances beyond the bubbles
Palatial Splendour
Buoyed by renewed demand, sales of the glitzy mansions of the ultra-rich are surging like never before. Real estate majors are looking to capitalise on this by launching luxury offerings in record numbers
Of Beaches and Cream
GianChand Single Malt Whisky