The Indian government is contemplating the deferment of Section 43B(h) of the Income Tax Act 2013, originally revised to expedite payments for micro and small businesses, in response to appeals from trade and industry associations nationwide.
Finance Minister Nirmala Sitharaman recently conveyed to leaders of various trade and industry associations that the enforcement of the new payment rule may be postponed.
The meeting, led by Member of Parliament C R Patil from Navsari ( Gujarat ), included representatives from prominent bodies such as the Confederation of All India Traders ( CAIT ) and the Federation of Surat Textile Traders Association ( FOSTTA ).
Post the discussion with the finance minister, trade and industry associations, primarily from Ahmedabad and Surat in Gujarat, promptly disseminated the government’s commitment and message to their members and the media. The Textile Association of Ahmedabad and Surat ( TAAS ) issued a press statement, indicating a potential one-year postponement of the new provision as assured by the finance minister.
However, TAAS cautioned that no official announcement has been made by the government on this matter. Consequently, traders and business owners are advised to exercise caution in their commercial decisions.
Since the introduction of the new payment rule in January 2024, trading activities have been somewhat disrupted. The clause took effect in the current fiscal year 2023-24, concluding on March 31, 2024. Nationwide trading has decelerated as buyers struggle to meet payment deadlines specified in the provision for the current fiscal year.
The Kerala Textile and Garments Dealers Welfare Association ( KTGDA ) has requested micro and small enterprises ( MSEs ) in the textile industry to change their MSME category from âmanufacturingâ to âtradingâ with immediate effect.
This request comes after the introduction of the clause in the Income Tax Act, which requires businesses to make payments to suppliers within 45 days, namely Section 43B(h), causing trade cycle disruptions across many industries, mainly to textile and garment traders, having a higher stock-retention period.
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