New Delhi, INDIA: In the India budget 2023, released on February 1, 2023, a relief has been sighted for the Indian micro, small and medium enterprises (MSMEs). As per recent amendments, the buyers can claim the deduction on income tax only on actual payments made to an MSME supplier.
Additionally, the government will insert a new clasue (H) in Section 43B of the Income Tax Act that mandates that any payable amount by an assessee to MSME beyond the time period of 45 days, which is specified in Section 15 of the MSMED Act, shall be allowed as deduction only on the actual payment. This amendment will come into effect from April 1, 2024, i.e. from FY25.
As the secretary general of the Federation of Indian Micro, Small and Medium Enterprises(FISME), Anil Bhardwaj, noted, the amendment will definitely improve the cash flow of small firms, as the government and private entities will have to make timely payments within a quarter.
Earlier, the buyers indulged in exploitation by buyers as they only made part-payments to ensure that the firms can pay GST dues, leaving the balance amount for the other quarter. This will make things much better.
Another beneficial scheme, named Credit Guarantee Scheme, has come up for small enterprises, which has been further extended with an additional injection of 9000 crores INR. As per the Finance Minister of India, Nirmala Sitharaman, the infusion in Budget 2023 will enable collateral-free credit of two lakh crore loans to MSMEs.
The Chairman of the IamSMEofIndia, Rajiv Chawla, stated that during the time of rising interest rates, this infusion would help MSMEs acquire funds as working capital or capex without fresh security and the rates cheaper by 1%.
This scheme will be enforced from April 2023. The Emergency Credit Line Guarantee Scheme(ECLGS), that was launched in 2020, was extended to 2023 instead of its earlier deadline, which was March 2022.
