MSME sector will be paid in 45 days, after which traders will be required to pay taxes rather than expenses

From today, micro, small and medium industries i.e. MSME will be able to get money for any business within 45 days. If a businessman does not make payment within 45 days, then this liability will be considered as income in his ledger and he will have to pay tax on it. However, if he pays it late, this amount can be adjusted against tax in the next financial year.

Actually, under the new rules, Section 43B (H) is to be implemented from the current financial year i.e. 2024-25, which will be from April 1. Under this, if there is an agreement between the MSME and the businessman, then on this basis the MSME should get the money within 45 days. Although this rule is good for MSMEs, they also fear that big buyers may break the deal with them. They can buy through some other means. According to the rules, traders will increase purchases from MSMEs which are not registered with government enterprises or businesses which do not come under the MSME category. Because the 45-day rule is not applicable here.

Meanwhile, businessmen have not been able to comprehend the new rule, according to Ashok Motiani, President of the UP Textile Industry Trade Delegation. The impact is already felt by retail firms. It was demanded by the Finance Minister that this regulation be extended for a full year.

Industry associations from several states had earlier in February urged the Finance Ministry to start this programme in April 2025, the start of the next fiscal year. Businessmen will realise this by then and start to prepare. However, the Ministry of Finance did not decide in this regard. However, there's a chance that this plan will be delayed in the final budget, which will be unveiled in July.

If a businessman does not make the payment within 45 days, then the amount paid will be treated as income and 30% income tax will be charged. If this amount is paid in the next financial year, it will be included in the total income tax liability of that year. The catch in this also is that if a businessman buys goods worth Rs 10 lakh. If 7 lakhs are paid and 3 lakhs are left. If next year his turnover is only Rs 2 lakh, then out of Rs 3 lakh, Rs 1 lakh will have to be included in the next year.