Promoting Timely Payments to MSMEs in India: A Look at Budget 2023-24
The Indian government’s unwavering commitment to promote Micro, Small, and Medium Enterprises (MSMEs) growth remains a cornerstone of economic development. This sector significantly contributes to employment, production, and exports, making it a focal point in the recent Budget 2023-24.
Budget 2023-24 Highlights
In her recent Budget 2023-24 speech, Finance Minister Nirmala Sitharaman introduced pivotal measures, consequently aiming at incentivizing timely payments to MSMEs. Now, let’s delve into the key proposals, thereby shaping the landscape for MSMEs in India.
Understanding the Proposed Clause
A critical aspect of the budget is the proposed insertion of clause (h) in section 43B of the Income Tax Act. This clause dictates that any sum payable 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 is deductible only upon 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 not only promotes timely payments but also bolsters the bargaining power of MSMEs in negotiations with larger businesses. This is a significant stride towards creating a more equitable business environment.
Challenges in Identifying MSMEs Vendors
Despite these positive developments, identifying MSME vendors poses challenges due to turnover limit fluctuations and UDYAM certificate migrations. The need for a reliable solution is evident.
Firmway’s MSME Confirmation Software
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 efficiently streamlines the process of identifying MSMEs, consequently eliminating the need for manual verification and significantly reducing the chances of making mistakes.
In conclusion, the Indian government’s initiative to promote timely payments to MSMEs. Firmway’s MSME confirmation software and, consequently, go hand in hand in promoting the growth and development of this vital sector. Additionally, the software provides a simple and efficient solution to the challenge of identifying MSME vendors. Consequently, it aids enterprises in taking 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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