The Biz Reporter
Srinagar, Feb 28: The Federation of Chambers of Industries Kashmir (FCIK) has called for deferment of
new rules enacted recently by the central government under section 43B of Income Tax
Act till these were comprehensively discussed with stakeholders for greater awareness
and understanding about their compliance and pros and cons.
While acknowledging that the aims and objectives of new rules have apparently been
enacted in pursuit of timely payments to and enhancing liquidity of MSMES, the FCIK
observed that there was need for comprehensive discussions with industry
representatives to assess advantages and disadvantages before such rules were put in
place for implementation.
“The rules also seem to lack clarity on their applicability and implementation” stated
FCIK in a statement, adding that registration as MSMEs was freely and equally
available to all traders, agents, service providers, processors and manufacturers on
Udhyam portal. Besides, MSMEs engaged in manufacturing and processing activities
themselves happened to be buyers of raw material and other services from traders and
fellow MSMEs well before producing and selling their finished goods.
The central government recently introduced significant changes in the Finance Act –
2023 after insertion of clause (h) in section 43B of the Income Tax Act with a view to
strengthen the enforcement of MSME payment regulations. The amended rules now
made it mandatory for the buyers to release the due payments of MSMEs within a
maximum period of 45 days or otherwise face disallowance of the expenditure
eventually enhancing their taxable income tremendously. The Finance Act furthermore
has advised all companies and trade entities for clearance of all previous outstanding
dues to MSMEs before March 31, 2024 and failure to adhere to these timelines will
result in the pending payment being treated as income, subject to taxation.
FCIK informed that the manufacturing sector in J&K had different types of buyers
including government departments and Public Sector Undertakings; wholesalers and
retailers and importers from various countries.
“Whereas hundreds of crores of due payments of MSMEs in J&K are withheld at the
government departments and PSUs for longer durations, no law including the ‘Delayed
Payments Act’ or ‘MSME SAMADHAAN’ has brought desired relief to MSMEs” informed
FCIK, adding that “even the orders passed by MSME Facilitation Council in some cases
does not get any compliance unless MSMEs are forced to seek relief in courts of law”.
Whereas the industry expected more stringent rules to compel government departments
and PSUs to release timely payments to MSMEs, no such initiative has found place in
recently amended Finance Act-2023.
FCIK has raised alarm that the new rules might adversely impact the supply chain of
various manufactured and processed goods from MSMEs of J&K to wholesale or retail
traders. “While such supplies are currently affected on diverse timelines for different
products, the new rules may force the buyers to reduce their intake and stocks which
eventually will impact marketing of MSMEs”, suspects FCIK.
FCIK has solicited support from the UT government in recommending
deferment of the new rules till comprehensive deliberations took place
between the Finance Ministry and stakeholders and a viable timeline
adjustment for different types of industry was incorporated in the rules.
