Promoting Timely Payments to MSMEs in India: A Look at Budget 2023-24
The Indian government has been taking various steps to promote the growth and development of the Micro, Small, and Medium Enterprises (MSME) sector as it plays a crucial role in the Indian economy by contributing significantly to employment, production, and exports
In the recent Budget 2023-24 speech, Finance Minister Nirmala Sitharaman proposed to insert a new clause in section 43B to incentivize timely payments to MSMEs.
The proposed clause (h) in section 43B of the Income Tax Act provides that any sum payable by an assessee to a micro or small enterprise beyond the time limit specified in section 15 of the Micro, Small and Medium Enterprises Development (MSMED) Act 2006, shall be allowed as a deduction only on actual payment.
The MSMED Act 2006 defines the time limit for payments as 45 days from the date of acceptance or the date of deemed acceptance of any goods or services.
The new clause in the Income Tax Act is expected to not only promote timely payments to MSMEs but also increase their bargaining power in negotiations with larger businesses.
However, identifying MSME vendors can be challenging due to the frequent changes in turnover limits and the migration to the UDYAM certificate.
To address this issue, the introduction of Firmway’s MSME confirmation software comes as a great relief for enterprises. The software helps enterprises identify the MSME status of their vendors, collect UDYAM certificates, and validate them using OCR technology.
By using Firmway’s software, enterprises can ensure that they are not only making timely payments to MSMEs but also saving them from incorrect information pass by MSME vendors.
The software streamlines the process of identifying MSMEs, eliminating the need for manual verification, and reducing the chances of making mistakes.
In conclusion, the Indian government’s initiative to promote timely payments to MSMEs and Firmway’s MSME confirmation software go hand in hand in promoting the growth and development of this vital sector. The software provides a simple and efficient solution to the challenge of identifying MSME vendors and helps enterprises take advantage of the tax benefits offered by the government.
- Data collection with customized forms and follow-ups
- MSME confirmations to help you know whether an entity is an MSME or not
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