New MSME Payment Rule: 45 Days to Settle Dues or Face Consequences

From April 1, 2024, the government of India is making plans to introduce a new rule with the help of the finance bill for micro, small, and medium companies. It will allow them to collect their full payment from the client within 45 days; in any other case, the buyer has to face consequences. The rule will help all MSME businesses get payment from the client and provider so that payment can assist them in developing their businesses faster. Before this rule, no proper law might force the dealer or purchaser to pay the amount within a specific timeline.

The new rule for MSME will force shoppers or providers to pay the quantity within 45 days; in any other case, they can face results, and the consequences can vary from condition to situation. Under Section 43(B), in the first situation, if the consumer fails to make the fee within 45 days, the acquisition of the goods will now not count as a taxable expense, which allows you to cause the client to fail the tax return on that product purchase.

In the second condition, if the buyer fails to make the payment within forty-five days, the purchaser has to pay 3% extra interest, in line with the RBI’s current interest charge exchange. That amount will not be taxable for the seller, to help the MSME supplier.

Though many industries aren’t happy with this rule and feature conferences with government officers to remedy the difficulty, within the fabric enterprise, the current price is a hundred and twenty days, making it 45 days. That’s pretty tough and impossible, according to the former chairman of Powerloom. Many enterprise experts suppose the rule will cause many order cancellations within the marketplace.

There is not any official comment from the Ministry of MSMEs for now about the problem; the authorities are quite optimistic about their decision and believe it’ll assist almost all the MSMEs.