New Fund Will Work To Help MSMEs: FM Sitharaman On 45-day Payment Rule
The fund is established to support MSMEs in case of financial strain, resulting from delayed payments
While talking about the central government's controversial 45-day payment rule, Finance Minister Nirmala Sitharaman has said that new fund in collaboration with banks by the Centre in the union budget 2024-25 will India's cash-strapped micro, small and medium enterprises (MSMEs)
This fund is established to ensure that MSME units receive support in case of financial strain resulting from delayed payments. Under this new clause in Section 43B(h) of the Income Tax Act 1961, traders are mandated to settle bills with MSME units within 45 days of purchase to avoid forfeiture of certain deductions.
The budget introduced various initiatives to support Indian MSMEs, but surprisingly it gave a miss to highly anticipated review of the newly implemented 45-day payment rule. This rule, effective since 1 April, mandates buyers to settle payments with MSMEs within 45 days of receiving goods or services, or face taxation on the outstanding amount. Despite concerns from MSME associations about potential contract cancellations and tax burdens on suppliers, the government chose not to revisit this rule, leaving the 45-day payment deadline unchanged.
To foster innovation and R&D, the Finance Minister talked about the establishment of the Anusandhan National Research Fund, amounting to Rs 1 lakh crore. This fund is created to bolster private sector-driven research and innovation. Sitharaman underscored Bengaluru’s pivotal role in the expansion of digital public infrastructure (DPI) across various sectors, particularly in agriculture. She found that this will make digital payments a commonplace occurrence, which will help a multitude of industries.
