Centre to tweak payment norms for small businesses

NEW DELHI: An exporter in Chennai, who runs multiple units, was forced to deregister one of the entities that was registered on Udyam – the portal for micro, small and medium enterprises – as some large buyers did not want to be caught in govt mandate requiring actual payment of all dues to MSMEs within 45 days in order to claim deduction for expenditure for tax purposes.
There are several such businesses across the country, which are complaining of govt’s well-intentioned move to ensure timely payments being used against small business owners, who have little leeway in negotiating with large companies that dictate the terms for pricing and payments.
Besides, there are others who have said the norms were against established business practices in their sectors or in certain parts of the country where payment over 60-90 days has been the norm.
The issue also generated a lot of heat during finance minister Nirmala Sitharaman’s pre-Budget meeting with representatives from the sector with businesses split on the issue.

Centre to tweak payment norms for small businesses

Official sources said that the feedback coming from small businesses is being taken on board and the Centre is set to tweak the norms in the Budget as the changes were incorporated through the Finance Bill.
“Govt is looking at ways to provide flexibility but a decision on the modalities is yet to be taken,” said an official, amid demands to even defer the implementation of the provision.
While Sitharaman had announced the implementation of the rule from financial year 2023-24, it was not until the end of the last financial year that chartered accountants and MSME entrepreneurs woke up to it. By the time the issue was flagged before the finance ministry, the election process had kicked in, making it impossible for govt to step in.

malek

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