SME Chamber of India Urges Continuation of 45-Day MSME Payment Rule

The SME Chamber of India has appealed to Finance Minister Nirmala Sitharaman to uphold the 45-day payment rule for MSMEs mandated by Section 43B(h) of the Income Tax Act. This rule ensures timely payments to MSMEs, aiding their financial health. The chamber also suggested revising loan schemes and NPA definitions to support MSMEs.

The SME Chamber of India has called on Finance Minister Nirmala Sitharaman to maintain the 45-day MSME payment rule as stated in Section 43B(h) of the Income Tax Act. This regulation, introduced in the Finance Act 2023, requires companies to settle payments to MSMEs within 45 days to be eligible for tax deductions, thereby encouraging timely payments.

According to the SME Chamber, many MSMEs suffer due to delayed payments, particularly when not dealing through the TReDs platform. The industry body highlighted that multinational companies and corporates are pushing MSMEs to deregister from the Udyam Portal and avoid the TReDs platform.

The chamber also recommended that the finance minister provide Rs 5 crore loans under the 'Differential Rate of Interest' scheme for micro and small enterprises, extend the NPA definition from 90 to 180 days for MSMEs, and establish a task force to address various credit-related challenges faced by the sector.

(With inputs from agencies.)